Answer:
Whether or not you need a buy-sell depends upon your business arrangement. The first thing to consider is the "why" question. People enter into buy-sell (and there are other mechanisms as well) agreements typically to plan their "out" when things either go sideways in the business relationship or when they don't want to be involved further. When you are in business with a partner there is always a need, at some point in the life cycle of the business, for you to give serious consideration to making sure your have a legally enforceable exit strategy. Does a start up business with little to no assets need an exit strategy? Probably not as much as a start up where the partners will invest heavily in the business. However, that start up business that began "lean and mean" should consider adding exit planning language as the business grows. Even the lean and mean start up may find exit planning useful for business continuity and/or cash flow for future ventures. Typical exit planning agreements encompass factors such as death of a partner, divorce of a partner, criminal/fraudulent/morally reprehensible activity of a partner, disability of a partner, and etc. Generally, these type of arrangements will be funded by some combination of insurance, cash surrender and/or a secured transaction.
Action Point: Does your current operating agreement and/or business arrangement have adequate exit planning language? Find out by calling Mr. Edwards or emailing him here to set up your appointment today.
