Category Archives: Buy-Sell Agreement Disputes

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What is the “Middle Market” of Companies and What Do They Have in Common?

Use of a term like “middle market” to categorize companies may be helpful to writers in national publications. They are looking at ways to describe the world, as are companies who do business with other companies. However, in reality, few business owners think of their companies as “middle market” businesses. What we know about middle market and larger companies is that each one is defined by its business and markets. We also know that one thing they have in common is that all of them need to work on things like I write about in Unlocking Private Company Wealth that have nothing to do with the particular business they are in, including complex ownership, a need for workable buy-sell agreements, management transition planning and execution, ownership transition planning and execution, and management of private company wealth.

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10 Tips on the Role of Valuation in Ownership and Management Transitions

On Friday, August 15, 2014 I spoke at a conference of the Society of Financial Service Professionals in Orlando. Florida.  It was the first time I have spoken before this group whose members include many financial planners–all of whom have at least one and many of whom have more than one professional designations.  I attended […]

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Is There Life Insurance Associated With Your Buy-Sell Agreement?

If there is life insurance associated with your buy-sell agreement, it is critical to be sure that the language in the agreement and any related documents specifies its treatment precisely. Life insurance can be used as a funding vehicle to acquire the stock of a deceased owner. If so, the life insurance is not treated as part of the purchase price. Alternatively, life insurance can be a corporate asset (corporate-owned life insurance, or COLI), and proceeds are part of value. The two different treatments provide different, perhaps dramatically different results for selling owners and remaining owners when buy-sell agreements are triggered by the death of an owner.

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Do You Know What Will Happen if Your Buy-Sell Agreement is Triggered?

Buy-sell agreements are ownership transition plans in disguise. Few business owners think about their buy-sell agreements in this light, but if your agreement is triggered, either through the death of a shareholder or otherwise, then ownership will change hands. Your buy-sell agreement is really ownership transition on autopilot. The real question is whether you, the other owners and the company will land safely when a trigger event occurs or if some or all of you will crash and burn. This short post addresses a simple question: Do you know what will happen if your buy-sell agreement is triggered?

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Do You Ask Enough Questions?

If you employ a questioning attitude, you can expand on what is known in many ways, to achieve what would otherwise have been unknown. And the previously unknown builds on our knowledge and ability to learn and do more. The example presented in this post is pretty simple, but powerful. You can do similar things by asking questions about what you see and hear and then comparing what you learn with what you already know or can infer.

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Five Business Ownership Transition Mistakes to Avoid

Ownership transition can be difficult. It is not something that most business owners like to think about. We will all, inevitably, transfer our ownership to others, if only at death. This post discusses 5 situations business owners may find themselves in and the perils of failing to plan for an eventual transition.

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Buy-Sell Agreements: The Third Appraiser’s Role in Detail

Having served as the third appraiser in numerous processes, I’ve learned from experience. The steps regarding the role of the third appraiser outlined in this post will not solve every problem. However, they will go a long way towards “fixing” processes that are otherwise broken, or badly bent.

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Third Appraiser for Buy-Sell Agreements: When Selected? Role?

The default valuation mechanism for many buy-sell agreements calls for the use of three appraisers to determine the price following trigger events. Such agreements have a variety of forms, but the goal of the three appraiser process is to reach a conclusion of the price for each transaction.

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A Buy-Sell Agreement Just in Time

Two partners finally created a buy-sell agreement after more than twenty years in business. At the unexpected death of one of them, the life insurance worked as a funding vehicle to purchase his stock. However, he had failed to communicate with his wife about the agreement and that was bothersome to her for a long time. The death of one partner then creates new issues for the other.