All closely held businesses face the possibility of an owner dying, retirement or becoming disabled.
A business owner’s death or disability can create major problems. A lifetime of hard work and investment can be jeopardized, leaving the other owners and the deceased’s family in the difficult position of sorting things out. A properly structured and funded Buy-Sell agreement permits an orderly transfer of the business.
There are several occurrences that can cause disruption of a business:
· Death of an Owner
· Disability of an Owner
· Bankruptcy or Divorce of an Owner
· Retirement of an Owner
· Withdrawal of an Owner prior to retirement
· A key non-owner whose death or resignation would greatly impact the success of the business
For Family Owned Businesses, there are additional considerations:
· Failure or liquidation of the business in event of sudden incapacity of the business owner, partner or key employee
· Unqualified and/or inexperienced heirs running the business
· Loss of income stream to remaining family members who are not active in the business
· The potential for unwanted litigation expense due to disagreements between active and inactive family members