Business Buyout Agreements

by Mancuso, Anthony; Laurence, Bethany K.

• ISBN13: 9781413301915
• ISBN10: 1413301916
• Edition: 3rd
• Format: Paperback
• Copyright: 2005-07-30
• Publisher: Nolo

Summary

To ensure a smooth transition following the departure of a partner, it's important that business owners in LLCs, corporations and partnerships write a buy-sell agreement at the start of their relationship. This book carefully explains each step of the process, providing all the tax and legal information an owner needs to draft a buy-sell agreement. The only book of its kind to address the lay reader, it includes an interactive, fill-in-the-blank agreement on CDROM.

Author Biography

Anthony Mancuso is author of Nolo's business-law series, which includes Form Your Own Limited Liability Company, Incorporate Your Business and How to Form a Nonprofit Corporation Bethany K. Laurence is Nolo's business-law editor

Table of Contents

An Overview of Buyout Agreements
What Is a Buy-Sell, or Buyout, Agreement?	3	(1)
Why Should You Create a Buyout Agreement?	4	(4)
When Should You Create a Buyout Agreement?	8	(1)
How to Use This Book	9
Limiting the Transfer of Ownership Interests
Transferring Ownership Interests	2	(1)
Right of First Refusal	2	(9)
Absolute Transfer Restrictions	11
Providing the Right to Force Buyouts
Why Provide the Right to Force the Sale of an Ownership Interest?	3	(2)
What If an Owner Wants to Retire or Stop Working?	5	(8)
What If an Owner Becomes Mentally or Physically Disabled?	13	(5)
What If an Owner Dies?	18	(8)
What If an Owner Divorces?	26	(3)
What If an Owner Loses His or Her Professional License?	29	(2)
What If an Owner Files for Personal Bankruptcy?	31	(2)
What If an Owner Defaults on a Personal Loan?	33	(2)
What If an Owner Is Expelled?	35
Structuring Buyouts
Types of Buyout Procedures	2	(3)
How Our ``Wait and See'' Approach Works	5
Funding Buyouts
Cash	2	(1)
Borrowing	2	(1)
Insurance	3
How to Set the Buyback Price in Your Agreement
Why Choose a Price in Advance?	2	(1)
What Valuation Methods Are Based On	3	(2)
How Our Valuation Provisions Work	5	(1)
Agreeing on a Fixed Buyout Price (Valuation Method 1)	6	(3)
Buyout Formulas	9
Choosing Payment Terms for Buyouts
Balancing the Interests of Buyer and Seller	2	(1)
Lump-Sum Cash Payments	3	(1)
Equal Payments Under an Installment Plan	4	(1)
Combined Cash and Installment Payments	4	(2)
Interest-Only Installment Payments	6	(1)
Customized Schedules of Payments	7
Completing and Updating Your Buyout Agreement
Finalizing Your Buyout Agreement	2	(4)
Resolving Buyout Disputes	6	(6)
Binding All Future Owners Under Your Buyout Agreement	12	(1)
Updating Your Buyout Agreement in the Future	13	(1)
Placing a Legend on Your Ownership Certificates	14
Income and Estate Tax Issues
Buyout Income Tax Issues	2	(9)
Buyout Estate Tax Issues	11
Lawyers, Tax Specialists and Resources
How to Find the Right Lawyer	2	(2)
Finding the Right Tax Advisor	4	(1)
Resources	5
Appendixes
A. How to Use the CD-ROM
A. Installing the Form Files Onto Your Computer	2	(1)
B. Using the Word Processing Files to Create Documents	2	(2)
C. Files Included on the Forms CD	4
B. Buyout Worksheet
C. Buyout Agreement