Buy Sell Agreements

Written on the 13th of January 2010 by Continuum Financial Planners Pty Ltd

Even if you’re looking to stay on in your business for longer or have no plan for retirement, a buy/sell agreement ensures the future of the business continues as you wish in circumstances prescribed in the agreement. Some of those circumstances might not be planned – and could arise without notice: accidents, serious illness, even death are amongst the more obvious situations of concern.

A buy/sell agreement is a legal contract that allows for the transfer of your business to a previously agreed party or person. The agreement means that there will be minimum disruption, confusion, or dispute if you relinquish control, possibly in the event of death or disability, but even upon retirement.

Importantly, if you wish it will ensure that your family is considered in the transaction so that no one will be left in unfortunate circumstances.
It is usual to have the provisions of a Buy/sell agreement supported by the provision of various insurance policies that will be referenced in the agreement. (Refer our article Buy-Sell Agreement cover for more on this topic.)

The Buy/sell agreement is one of the agreements that constitute a business succession plan. Refer our article on Business Succession for more on this matter. It is preferable that the business succession plan be documented, but many businesses fail to do so: a minimum position should be the documentation of the Buy-Sell Agreement (and its funding through insurance policies that are kept up-to-date from that time forward).

For guidance or assistance in respect of your Business Succession Plan, or of your Buy/sell agreement contact us at Continuum Financial Planners for an appointment.

We thank McKays Solicitors for allowing us to base our article on this topic on material found in their website.