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buy-sell agreement

Sale of Business Leads to Expensive Breach of Contract Lawsuit

By Business Contracts, Business Lawyer

As reported in The Connecticut Law Tribune, “Oral Surgeon Wins $3.1M in Breach of Contract Suit.” Although you can read the details of the particular lawsuit in Karen Ali’s article, note the important lesson from this case. The terms and conditions of an agreement to buy or sell a business must be followed, including post-closing obligations each party owes the other.

When picking a business partner, be at least as careful in performing due diligence as you would when selecting a potential spouse for marriage. The monetary stakes are often higher in the business arrangement.

Also make sure that you have a signed professionally prepared buy-sell agreement so that if one party decides to leave, you’ve already put in place a road map to be followed that preserves business continuity and ideally does not adversely affect the relationship between the parties upon separation.

How To Protect Your Business With A Buy-Sell Agreement

By Internet Lawyer

buy-sell agreementWhen there’s more than one owner of your company, it’s prudent to protect your business with a buy-sell agreement. This is true whether you do business via the Internet, offline, or a combination of the two.

What’s a buy-sell agreement?

It’s a legally binding contract that triggers the buyout of a co-owner (corporate shareholder, LLC member, etc.) when one or more key events happen that make it necessary to change ownership to protect the company and the other co-owner(s).

Related Article: Business Contracts – Why You Should Avoid Email Deals

This is especially important for Internet startups and other small businesses where there are only a few business co-owners instead of many investors.

What types of events trigger the buyout of a co-owner under a buy-sell agreement?

Here are a few likely buyout events you will want to discuss with your Internet business attorney…

1. Death

2. Divorce

3. Permanent Disability

4. Personal Bankruptcy

5. Criminal Conviction for a violent crime or one involving dishonesty (e.g. theft)

6. Retirement or resignation from employment

7. Investment in a competing business

In addition to the triggering events, you will want to work with your Internet lawyer to determine the processes for how the buyout will occur.

  • What are the payment terms?
  • Who pays?
  • Will the remaining co-owner(s) buy out the departing co-owner or will the company purchase his equity interest?

Key Person Insurance to Complement Your Agreement

If the death or disability of a co-owner would harm your company, you may want to work with an experienced business attorney to obtain key person insurance that would help your company survive the loss of the co-owner.

Related Article: 7 Keys For Picking The Right Internet Lawyer For Your Business

If your business needs a buy-sell agreement, or have an existing agreement that needs to be reviewed and updated, now is the time to set up a related phone consultation with Business Lawyer Mike Young.

Buy-Sell Agreements: How to Get Rid of Your Partners

By Internet Lawyer

business-partners-fightingAll business relationships end. A few when one of the parties is buried six feet under. Most end for other reasons: an owner’s divorce, bankruptcy, personality conflicts, etc. The list goes on. Yet one thing is clear: most Internet entrepreneurs have done absolutely nothing in advance to prepare for the inevitable.

One of the easiest preventative measures that e-commerce company owners can do is enter into a buy-sell agreement that provides for the buyout of other each other under certain conditions (like the ones listed above). Similar to a pre-nuptial agreement, a buy-sell agreement can be structured so that everyone wins in the future when the relationship terminates. There’s no better time to put such a contract in place than when all shareholders, members, partners, etc. are getting along instead of fighting. A mutual interest in protecting the company exists and no one is looking to punish another at that time.

Unfortunately, most online entrepreneurs wait until it is too late. Instead of resolving their differences and parting ways based upon specific terms in a buy-sell agreement, they try to figure out how to escape what is now a bad deal with maximum gain and sometimes with maximum pain inflicted on the other side.

If you own an e-commerce company with others, talk with them about having your Internet business lawyer draft a solid buy-sell agreement so that you can reduce the risk of destroying your business in the future.

Buy-Sell Agreements Can Protect Ownership of Your Business

By Internet Lawyer

A buy-sell agreement, also known as a buy-and-sell agreement, allows business owners to make arrangements by contract for surviving owners to buy out the interest of a co-owner who dies or decides to leave the company. Whether your business operates as a partnership, a corporation, or a limited liability company, a buy-sell agreement can help you plan for the future.
This type of contract can provide for mandatory or optional purchases of an owner’s interest upon death, divorce, bankruptcy, retirement, and other events. Because you, your co-owners, and your company operate under unique circumstances, a one-size-fits-all approach usually doesn’t cut it when creating a buy-sell agreement.

You should prepare to make the best of all circumstances that can trigger a buyout so that your business continues operating and each owner benefits from the advance planning made in the buy-sell agreement.

And because circumstances often change both on a business and personal level, it is important to have any existing buy-sell agreement reviewed on a regular basis with your lawyer to ensure that it still accurately reflects what you want.