Buy / Sell Agreements Can Protect Interests and Mitigate Risk.
They can also create a false sense of security. Below are a few questions to help your clients self-assess their business to see if they may have exposure or a need that should be addressed.
If Your Client Has a Buy / Sell:
- Has their company grown substantially since the buy/sell was established? Often, a buy/sell agreement is created and then never updated to reflect the current state of the company. Additional owners, company growth, changing interests, and other variables may have surfaced.
- Is it updated every three years? That should be a set process to instill in the company.
- When was their last valuation conducted? The buy/sell should be funded by life insurance to purchase the interests of a partner/co-owner should an incident occur. If the valuation is older, the life insurance may not cover the current value, and there may be significant exposure.
Not Sure if Your Client Has a Buy / Sell?
That question needs to be asked. A multi-owner business without a buy/sell funded with life insurance is operating with risks.
We Can Help.
The cost of a valuation can vary significantly depending on the need. A summary level valuation has a lower cost than a detailed valuation intended to support a case going into litigation. For the purposes of updating a buy/sell agreement we can provide a summary level valuation to help your clients not just ensure their life insurance needs, but also to gain some insight into the value of the business should they be considering an exit or a family succession.
To Learn More, Please Contact Thomas Schwartz.
Tom is a Certified Valuation Analyst and can be reached at 716.204.9865 or firstname.lastname@example.org