Small businesses with multiple owners need a buy/sell agreement in place to ensure the business survives should one of the shareholders leave – unexpectedly or according to plan. If you ask two owners of a business who want to part, how much they each think the business is worth, the figures can differ dramatically.
Big disparities in buyer/seller expectations are not uncommon when an agreement hasn’t been put in place before one party decides to exit the business or dies. And where an effective succession plan hasn’t been put in place, there’s a very good likelihood of disagreement and litigation.
Often the spouse expects to receive an insurance payout and retain their partner’s share in the business."
Everyone is better off in the long run where an agreement is reached, even if it’s just to make sure appropriate insurance policies can be put in place to cater for the owners’ estates should anything happen to them and ensure the survival of the business.
It is a wise precaution to have spouses consent to the agreement, so there are no surprises for them.
Contact Baggetta & Co, your professional Business Accountants in Perth, today to make sure your business can survive a breakup!
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Paul Baggetta is the Founder & Principal of Baggetta & Co. Paul Baggetta has been a Taxation Accountant since 1981, a Financial Planner since 1998, and in 1993 qualified as a Real Estate Licensee, holding a Triennial Certificate (currently not trading) and operated his own Real Estate business for property investment clients for over 5 years as a second business.
Financial planning services are provided by Paul Baggetta as an Authorised Representative (No. 261469) of Capstone Financial Planning Pty Ltd. ABN 24 093 733 969. Australian Financial Services License No. 223135.
Taxation & Accounting services are provided by Paul Baggetta as a Registered Tax Agent (No.61487008) and is a Member of SMSF Association, FIPA & NTAA.