How to Finance a Buy-Sell Agreement

In a previous blog entry I discussed the importance of the buy-sell agreement to any new business, especially when it is closely held (i.e. a small number of members/owners/shareholders). The question my clients ask me at this point is how can they finance the buy-sell agreement. Oftentimes they simply don’t have the money to buy their partner out, but there are ways around this. One way is called key-person insurance. It is a life insurance policy on each member,  either paid for by the

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The Buy-Sell Agreement

When people come to me with their idea for a business, one of the first things I bring up is the buy-sell agreement. Perplexed, my clients ask why I want to talk about selling a business before it’s even come into existence. The answer is, because a buy-sell agreement operates like a prenuptial clause, and in this case, the marriage is the business itself. If a fledgling company is forced to divide its assets, it is likely to go out

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