It is easy to start a business, but how do you get out?
If you are opening a business in Humboldt County, or are current a Humboldt County business owner, your right or ability to transfer your ownership interest is a matter that you need to carefully consider.
In deciding to open a business, a great deal of time is often spent in choosing the legal form or entity for the business, obtaining funding for opening the business and determining how the business will be managed. However, what happens when one of the owners dies, becomes disabled, retires, or simply wants to sell his or her interest in the business?
Business owners often enter into “Buy-Sell Agreements” to control the sale or other transfer of ownership interests, or to provide for the purchase of such interest by the business or company upon the happening of these types of events.
A Buy-Sell Agreement can accomplish several business goals. First, the founders of the company can keep out unwanted new owners by controlling the sale or transfer of an interest by a right-of-first-refusal provision. Second, a Buy-Sell Agreement can provide assurance that on the death, disability, or retirement of an owner, his or her estate will be able to dispose of the ownership interest. Third, control over the disposition of an ownership interest can establish a continuity of control for the founding owners. A Buy-Sell Agreement can also be used to set forth how the business or company will be managed.
Whether you are a corporation, partnership, limited liability company or limited partnership, the right or ability to transfer your ownership interest is a matter that needs to be carefully considered in the planning stage of opening your business.
If you would like assistance with business planning, please contact our office.
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