3 Benefits of Buy Sell Agreements

Buy sell agreements are an agreement between the owners of a business to purchase a portion of the business at a certain point in the future. This type of agreement can benefit all parties involved. Here are some of the benefits of buy sell agreements.

1. Establish Fair Price

One of the best things about buy sell agreements is that they help establish a fair selling price in advance. If one of the owners of a business passes away unexpectedly, the other owners of the business know that the family members need to sell their portion of the business. At that point, they could take advantage of this situation and pay less than market value. By agreeing to the price in advance, there is no negotiation.

2. Could Generate Cash

Many buy sell agreements have life insurance policies tied to them. When one of the business owners dies, a policy will pay the other business owners the cash that is required to purchase their ownership in the business.

3. Protect Your Investment

This type of agreement also protects your investment. You will have a lot tied up in the business and you want to make sure that you get what is owed to you if you need to leave. 

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