If you own a business in Illinois, Buy-Sell Agreements that will direct the disposition of the business come whatever may are something you simply need to have. Because life circumstances can change when you least expect it, these straight forward agreements will help protect your business and your business relationships. When it comes to drafting buy-sell agreements, they should cover the following possibilities:
- A partner wishes to retire, or is disabled and can no longer perform their duties and responsibilities.
- An owner passes away and their surviving spouse or children do not wish to continue with the business.
- A partner decides to sell their stake in the business.
- An owner is having financial difficulties such as liens to creditors or to the IRS.
- A partner is in the midst of a divorce and must divest assets as a result.
Ultimately, the primary purpose of a Buy-Sell agreement is to ensure equitable and fair distribution of assets when a business relationship comes to an end. This ensures that everyone from surviving heirs to remaining partners will receive just compensation and treatment.
In Illinois, Buy-Sell agreements should always include the following to be agreed upon by all partners and owners to the business:
- A method that will allow owners to leave or remain active in the business under different circumstances.
- Provisions that determines to whom, and when an owner can sell their shares/stake in the business.
- Divestment options that allow for either lump sum or distributed payments of ownership shares over a period of time.
- Processes to compel the sale of ownership shares should a partner become disabled, declare bankruptcy, get divorced, retire, or pass away.
- Detailed guidelines for determining the value of the business and the calculation of ownership shares from this calculation.
- Clear assignment of all assets and liabilities should the business be carrying debt at the time any Buy-Sell agreement is executed.
- Buyout procedures and financing options for any payouts.
- Determination of tax liabilities resulting from any buyouts.
By including all of the following, you will considerably reduce the risk of squabbling and business failure when your business relationship comes to an end. This will help protect you, your partners, your heirs, and of course, your customers and clients.
Most importantly, it is crucial that you hire professional attorneys who have experience drafting reliable buy-sell agreements. At the Law Offices of Burton A. Brown, our attorneys have considerable experience drafting Illinois buy-sell agreements you can rely on. We encourage you to contact us at 312-236-5582 and we will be happy to answer your questions and offer you our services.