Before you put it up for sale, you need documentation on everything that is relevant to your business. You need: A buyout or buyout contract is a legal contract that describes what happens when a co-owner or partner participates in a business if he dies or wants to leave the business. The repurchase agreement defines the types of events that trigger the contract. Each agreement is developed to best meet the needs of each company. It may contain specifications on who can buy shares and what type of life situation would trigger a buyout. It could also indicate how the purchase is financed. Any business, even a small business, could use a buy-sell agreement. They are especially important when there is more than one owner. The agreement would infer how shares are sold in all situations — if a partner wants to retire, divorce or run away.
This agreement would protect the business, so that the rights of heirs or former spouses could be accounted for without having to sell the business. A buy-back contract is a document used when a company wishes to enter into an agreement with the owners of the business on how to sell or transfer its interest in the business, called «ownership entities.» These documents govern what happens in different situations, even if an owner wants to voluntarily sell his property of the business during his lifetime. The business can be of different forms – a company, LLC, partnership, etc. – the same types of questions will be asked. A buy-back contract provides a concrete way to protect your business`s future and ensure it goes beyond your commitment. Each company is unique in structure. A deal with several co-founders would have a more complicated buyout contract. While an individual business is often easier to design and execute. This list is intended to give you a general overview of the clauses and scenarios that should be considered in most sales contracts. Individual entrepreneurs may also need it. For example, if an owner wanted a loyal employee to take over the business after he or she left, that agreement could be. You can also use one to leave the business to an heir – which is often a great way to reduce inheritance tax on the continuation of the business.