Many businesses that are owned and managed by multiple partners or family members do not have a plan in place should certain triggering events occur such as death or divorce. It is important to have a contingency plan to ensure a smooth transition at little or no expense to the existing owners.
What is a buy and sell agreement?
Think of it similar to a Will, but for a business. Essentially, it is a binding agreement between the owners or principals of the business (no matter the entity type) that determines what will happen in the event that a partner passes way, is held up in a divorce, files for bankruptcy or leaves the firm.
Many buy and sell agreements contain an insurance component which guarantees that in the event a partner is no longer with us, the other partner(s) will have the cash value to purchase the other share of the business. The clauses in the buy and sell agreements will dictate the outcome. This is why it is particularly important for all parties involved to pay close attention to every detail in the agreement. (more…)
By Mike Handelsman, Group General Manager, BizBuySell.com & Bizquest.com
Thinking of turning your dream of starting a business into reality? You’re in good company. According to a Yahoo Inc. poll, two-thirds of Americans have entrepreneurial aspirations for reasons including the ability to do what they love and so they can be their own boss.
Realizing the dream of starting a business, though, can be challenging without the right know-how. Most small business buyers have never purchased a business before, and it can be difficult to know where to start. Keeping four critical factors in mind can help ensure success when investing time and money into a small business. (more…)
Incorporation is an important step in the life of a business, but unfortunately the true value of incorporating a business or forming a limited liability company (LLC) is often not realized until the business faces a negative situation, such as a lawsuit or bankruptcy.
A primary advantage of forming a corporation or LLC is the limited liability these entities afford their owners. Typically, owners are not liable for the debts and obligations of the business; thus creditors cannot pursue the personal assets of the owners to pay the business debts. Conversely, in a partnership or sole proprietorship, where the owner and the business are considered legally the same, the owner’s personal assets may be used to pay debts of the business.
Other advantages of forming a corporation include:
· Incorporating may help to establish credibility for a new business with potential customers, employees, vendors, and partners. (more…)
By Peter Justen –
One of the debates I hear most often revolves around the need for a Business Plan. Love them or hate them…everyone has an opinion. I’ve heard VC’s say they never do anything without one, and I’ve heard them say they are a waste of time.
My opinion? Yes. No. Absolutely. No way. Without a doubt. Maybe.
I think it all depends on what you are going to use it for. I’ve seen hundreds (and written dozens) of business plans over the years and I can’t think of one where everything went according to the plan that was so carefully written. So why bother with them? Simple. I think the highest value to be gained from putting thoughts to paper lies in helping the writer think through their models.
Top 5 Reasons to Write Them
1. Make mistakes on paper before you make them with dollars. It’s a really good exercise to really think through your business model. (more…)