Buy-Sell Agreements
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Buy-Sell Agreements Lawyer in El Paso, TX
A buy-sell agreement is a legal document that outlines what happens to a business when an owner exits, retires, or passes away. Whether you own a small business, a partnership, or a corporation, having a structured agreement helps facilitate smooth ownership transitions while protecting the interests of all parties involved.
The skilled team at Law Office of Albert Nabhan, PLLC. helps business owners and stakeholders in El Paso, TX, and surrounding areas with preparing and reviewing buy-sell agreements. Working with a buy-sell agreements lawyer helps structure agreements to align with business goals, estate plans, and financial interests. Give us a call at 915-292-3518 or reach out to us online to discuss your specific needs.
What Is a Buy-Sell Agreement?
A buy-sell agreement, sometimes referred to as a business succession agreement, is a legally binding contract that defines how a business owner’s interest is transferred in the event of retirement, death, disability, or voluntary departure.
Common Reasons for a Buy-Sell Agreement:
- Ownership transition planning for family businesses or partnerships
- Preventing disputes by defining buyout terms in advance
- Protecting financial interests by setting a business valuation method
- Minimizing business disruptions when an owner exits the company
- Coordinating with estate plans to facilitate inheritance planning
Why Work with a Buy-Sell Agreement Attorney?
Creating a legally structured buy-sell agreement requires careful planning to address various business and legal factors. Without professional guidance, a poorly drafted agreement may lead to disputes, financial losses, or unintended tax consequences.
How a Lawyer Can Help with Buy-Sell Agreements:
- Drafting and customizing agreements tailored to the business structure
- Defining valuation methods to determine the fair market value of shares
- Outlining funding mechanisms such as life insurance or installment payments
- Aligning agreements with estate planning to protect family assets
- Reviewing and updating agreements to reflect ownership or legal changes
Types of Buy-Sell Agreements
Cross-Purchase Agreement
Each business owner agrees to buy the shares of another owner if they leave, retire, or pass away. This structure is commonly used in partnerships or small businesses with a limited number of stakeholders.
Entity-Purchase Agreement (Redemption Agreement)
The business itself agrees to buy the departing owner's interest rather than individual owners. This is often used when a corporation or LLC wants to maintain business continuity.
Hybrid Buy-Sell Agreement
A combination of the cross-purchase and entity-purchase structures, allowing both the business and individual owners to participate in the buyout.
Common Challenges in Buy-Sell Agreements
Valuation Disputes
Determining the fair market value of a business can be complex. A well-drafted agreement should include a predetermined valuation method to avoid conflicts.
Funding the Buyout
Without proper planning, the remaining owners may struggle to finance the buyout. Common funding options include:
- Life insurance policies
- Business reserves
- Installment payments
- Bank financing
Estate Planning Conflicts
If a business owner passes away, their heirs may have different interests than the remaining business partners. Coordinating the buy-sell agreement with an estate planning lawyer can help prevent inheritance-related conflicts.
Frequently Asked Questions
What is the purpose of a buy-sell agreement?
A buy-sell agreement defines what happens to a business when an owner departs, retires, or passes away. It provides a structured process for ownership transition and prevents legal or financial conflicts.
Do I need a buy-sell agreement if I own a family business?
Even in family-owned businesses, a buy-sell agreement helps clarify ownership rights, succession planning, and financial arrangements to avoid future disputes.
How is a business valued in a buy-sell agreement?
The agreement can define a valuation method, such as a fixed price, appraisal process, or formula-based calculation.
Can a buy-sell agreement be modified?
Yes, buy-sell agreements should be reviewed periodically and updated to reflect ownership changes, business growth, or legal developments.
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Contact a Buy-Sell Agreements Lawyer in El Paso, TX
If you are a business owner looking to create, review, or update a buy-sell agreement, contact Law Office of Albert Nabhan, PLLC. today. We assist clients in El Paso, TX, and surrounding areas with legal guidance on business succession planning.
Call us at 915-292-3518 or contact us online today to schedule a FREE consultation.