Any business, even a small business, could use a purchase-sale contract. They are especially important when there is more than one owner. The deal would delineate how shares are sold in any situation – whether a partner wants to retire, experience a divorce or die. This agreement would protect the business, so that the heir or former rights of the spouses could be taken into consideration without having to sell the business. The state statutes that govern legal closure require owners to enter into a purchase-sale contract. In addition, sound business planning requires that a purchase-sale contract also be used in a limited liability company (LLC) or in a conventional company. These agreements are often compared to marriage contracts for companies. They determine what happens to the ownership of the business when one of the owners (or individual entrepreneurs) undergoes life changes that may influence the continuation of the business itself. Life changes can range from divorce or bankruptcy to death. The buy-sell agreement protects the business and the remaining owners from the effects of an owner`s personal life that can impact the business. While all these provisions can help, when a triggering event occurs, they are only the degree of cooperation of the owners in the implementation of the procedures described in the purchase-sale contract.
In other words, there may be cases where an owner must go to court to enforce the purchase-sale contract. However, this is always better than not reaching an agreement that the court can enforce. A buy-sell agreement offers a concrete way to protect the future of your business and ensure it lasts beyond your commitment.. . . .