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The foresight in implementing a buyout agreement

On Behalf of | Oct 21, 2020 | Business Law |

On the bright side of things, your business succeeded. You and your business partner had a firm understanding of the risks and the markets along with an overabundance of dedication, energy and investment. But, now, you have been taken by mild surprise. The signs were there, and rumblings kept at a minimum, but your partner wants to leave the company that you spent years creating and building.

Your gut told you, though. You had a slight inkling this might happen as minor disagreements, sometimes, turned into heated exchanges with this partner. Often, the two of you were at loggerheads over competing business goals and visions, while faced with the occasional inconsistent sales and fluctuating revenues. Can you settle this split through negotiation or is litigation inevitable?

Potential sale, buyout terms and price

Skillfully, you had the foresight and wherewithal that may help you avoid litigation. When the two of you created the business, you installed a buyout agreement or often called a buy-sell agreement. This legal document is a prenuptial agreement between business partners.

Such a contract between business owners lays out what happens related to the potential sale of the business as well as the buyout terms of an owner’s business interest. It also addresses the valuation process in determining the acquisition price.

The truth is that, like marriages, most business partnerships fail. Having a buyout agreement is a critical part of business planning. While creating a business partnership agreement, it is important to simultaneously implement a buyout agreement. You will be grateful for doing so.