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Buy-Sell Agreements

measuring tapeBuy-Sell Agreements

If you operate your business in partnership with another person, or you are one of a few shareholders in a corporation, or just one member among several others in a LLC, planning for unforeseen circumstances is essential.  Certain life events can devastate a business.  Business owners who co-own a business with others face many risks, including:

  • Divorce;
  • Bankruptcy;
  • Death;
  • Disability.

Unfortunately, these types of events occur every day without notice.  If your co-owner is affected, you and your business may struggle to survive.  Fortunately, with proper long-term business planning, many of the risks associated with these types of events can be avoided through the use of buy-sell agreements. If you haven’t already, you should discuss the risk of these types of events with your co-owners and partners, and make arrangements for such a contingency.  Our business attorney can meet with you and your partners or fellow members or shareholders to facilitate conversation about these types of risks and to develop a legal plan for moving forward.  We can draft a buy-sell agreement that makes arrangements for and ensures the business will survive such an unforeseen event.

A buy-sell agreement between business owners will provide for the transfer of an owner’s interest in the business upon the occurrence of a certain event.  As a practical example, if one owner dies, often the other owners will not want to continue in business with the deceased owner’s family or spouse.  To avoid this scenario, a buy-sell agreement will require the deceased owner’s heirs to transfer the deceased owner’s interest in the business to the other owners in exchange for payment, which will typically be set at fair market value.  To fund the purchase of the ownership interest, business owners will obtain life insurance on each of the owner’s lives.  Upon their death, the beneficiary of the life insurance policy (either the other owners or the business itself) will use the proceeds to purchase the deceased owner’s interest in the business.  A comprehensive buy-sell agreement can make similar arrangements for the divorce, bankruptcy or disability of another owner.

If your business is owned by multiple persons, a buy-sell agreement is critical to your long term stability.  A Tailored Legal attorney can help you decide whether your business needs a buy-sell agreement, and can help you negotiate the terms of such an agreement.  We can then draft the agreement and work with your insurance broker to ensure proper insurance funding of the agreement.  Contact Tailored Legal today to schedule your no cost consultation to discuss your business’ need for buy-sell agreements.



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(760) 888-1227
334 Via Vera Cruz
Suite 253
San Marcos, CA 92078
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