A simple form of buy/sell agreement is a writing with a friendly competitor to take your business over in case of your death. And for them to pay the survivors an agreed upon set amount. Stepping up, below is an outlines for a buy/sell strategy plan as follows:
1) Pay for a professional valuation of the company.
2) Buy life insurance or cross life insurance.
3) Make the beneficiaries the ones who will survive the insured.
4) Immediately sign the shares of the company over and hold them in trust.
5) Actually or simultaneously draft up the buy/sell agreement with the following:
a) provision for death
b) provision for disagreement
c) provision for departure or retirement
d) provision for disability
e) provision for dissolution
All these topics are lead-ins for discussion and elaborations that can be worked out in the writing of the agreement. All of these topics will have loose ends that must be addressed in the final working out of the written agreement.
A good friend who is a CPA says this to me, “Michael, no matter how well you plan, there are always things that arise that were not anticipated. The best we can hope for is to plan as efficiently as possible to attempt to avoid as many surprises as possible.” I will add: Life is not meant to be perfect. The greatest gift of life is the ability to recover with grace and love from situations of seeming despair. That is the true mark of a humane wise business person.