A comprehensive Buy-Sell Agreement should be part of any business formation involving multiple parties, including business or professional partnerships. Failure to provide for the purchase or sale of a business or partnership interest can leave a business vulnerable to costly ownership disputes that often threaten their survival.

The Los Angeles business law firm of HOWARD | NASSIRI offers business formation planning, including the legal establishment of partnerships and corporations as well as Buy-Sell Agreements. A California Buy-Sell Agreement is a binding contract among business owners, which outline when and how an owner can sell an interest; who is eligible to purchase an interest in the business; and how the purchase price will be determined.

Businesses without a thorough Buy-Sell Agreement frequently do not survive a change in ownership that can come with the divorce, retirement, bankruptcy, disability or death of one of the owners.

• Divorce: The end of a marriage is frequently the cause of ownership disputes in co-owned businesses without a Buy-Sell Agreement -- particularly in community property states like California where property acquired during marriage is considered jointly owned. A good Buy-Sell agreement can require the former spouse to sell the interest back to the business.


• Bankruptcy: In the event of a bankruptcy by one of the owners, a business without a Buy-Sell agreement could face liquidation. An agreement can force an owner to sell his interest, with the proceeds going to a bankruptcy trustee. Having the Buy-Sell Agreement in place can literally save the life of a co-owned business.


• Business Valuation: A Buy-Sell Agreement can avoid disagreement about business valuation, which frequently surface between partners who cannot agree on the terms of a sale. In such cases, the agreement will govern how a valuation is determined, which can go a long way toward resolving what can otherwise be a costly legal fight over valuation at the time of a sale.


• Financing: The challenges co-owners can face in financing the share of a business interest can frequently endanger businesses without a Buy-Sell Agreement. A payment plan should be included as part of the agreement. Such plans typically require 25-50 percent down, with the remaining payments spread out over 3-5 years. Having such plans in place before the need for a buyout, can help ensure the continued survival of the business.


• Estate Planning: Buy-Sell Agreements can be useful in planning the transfer of a business to heirs, where a high valuation can cause unforeseen tax consequences. The terms of an agreement may legally set the value of a business interest much lower than the sale value might bring at the time of an estate settlement.

The Los Angeles business lawyers and estate planning attorneys at HOWARD | NASSIRI offer comprehensive business and estate planning services throughout the Los Angeles area, including Anaheim, Riverside and Santa Ana. Call today for a free and confidential appointment to discuss your rights.

Los Angeles Buy-Sell Agreements - Call (800) 872-5925 - HOWARD | NASSIRI