Buy/Sell Funding
Buy/Sell Funding is a financial strategy designed to facilitate the smooth transfer of business ownership in the event of a partner's departure, disability, or death. It ensures that the remaining owners have the necessary funds to buy out the departing partner's share, protecting both the business and the departing partner's interests.
Why Your Business Needs Buy/Sell Funding​
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In the event of an unexpected departure of a business partner, disputes or financial strain can arise if there is no clear plan in place. Buy/Sell Funding helps prevent these issues by providing a predefined financial solution, allowing the business to continue operating without disruption and ensuring fair compensation for the departing partner or their heirs.​
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Benefits of Buy/Sell Funding​
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Business Continuity: Ensures that the business remains operational and under the control of the remaining partners without external interference.
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Fair Compensation: Provides a fair and predetermined valuation of the departing partner's share, ensuring their family or estate is appropriately compensated.
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Prevents Disputes: Reduces the potential for conflicts among remaining partners by outlining clear terms for the buyout process.
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Protects Business Value: Helps maintain the stability and value of the business by ensuring a smooth transition of ownership.
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How Buy/Sell Funding Works​
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A buy/sell agreement is established between the business partners, detailing the terms of the buyout. The funding can be arranged through life insurance policies, where each partner takes out a policy on the others, or through other financial mechanisms. In the event of a partner's death or exit, the funds from the insurance payout or other sources are used to buy out the departing partner's share, allowing the business to continue without financial strain.