Buy/Sell
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The purchase or sale of a business can be a major part of a Business Succession Plan. When most business owners are evaluating succession, there are primarily two types of agreements that are considered.
- An Entity Agreement
- A Cross-Purchase agreement
Under an entity agreement, the business enters into an agreement with each owner. Upon the death of the owner, the business will buy the business interest of the deceased partner or redeem the stock. Essentially, the business carries life insurance on each owner, with the business as the beneficiary.
Under a cross-purchase agreement, each partner is the owner of the insurance policy on the life of the other partner. This type of agreement typically works best with a small number of partners for small to mid-sized businesses.
One difficult aspect of a buy-sell agreement is determining the purchase price at which the business interest will be bought and sold. It is not uncommon for a business to increase in value over time, thus, it is important to revisit these policies periodically.
If you are considering succession inside of your business, or you would like for one of our advisors to assist in the creation of a Buy/Sell Insurance Policy, please contact our office at (706) 922-3590, or by clicking on the form below.