Business Succession Planning: How to Use Buy-Sell Agreements to Plan for an Owner’s Retirement

Video by Attorney Kevin O’Flaherty

Article written by Illinois Attorney Kevin O’Flaherty

In this article we discuss business succession planning and explain how to use buy-sell agreements to plan for an owner’s retirement. We explain three different options to plan for a business owner’s retirement with buy-sell agreements, including: the company purchasing a retiring owners shares through a lump sum payment, the company purchasing a retiring owner’s shares through installment payments, and the gradual transfer of a retiring owner’s shares to the next generation.

What is a Buy-Sell Agreement?

A buy-sell agreement is a contract between business owners to provide for ownership succession should an owner wish to disassociate from the company, should the company wish to terminate an owner’s interest, or should an owner die or become disabled. For more on buy-sell agreements generally, check out: Buy-Sell Agreements for Closely-Held Corporations, LLCs, and Partnerships Explained.

How to Plan for a Business Owner’s Retirement With Buy-Sell Agreements

Buy-sell agreements are an excellent tool to plan for an owner’s retirement. In the absence of a succession plan, the retirement of an owner can be economically painful for any remaining owners, if not impossible for the…