Buy-Sell Reprise: Striking Responses
Hello,
My recent buy-sell letter prompted a number of responses. Several comments pointedly underscored the
risks of outdated agreements. I pass
some along for your consideration.
A CPA friend wrote: “This
particular document is one of the most under utilized and when used, under
performing legal documents out there. The valuation approach is in most
cases flawed in multiple ways, the lack of care to the use of insurance and the
valuation date lead to days in court, and the lack of focus by management in
making sure the issue is visited annually creates nothing short of panic when
the day arrives. It's incredible.”
A business owner commented: “If something were to happen to me today my wife and family would be
in a real mess. I must fix that.”
A horror story came to me about a man who died some years
ago as a shareholder in a business with a fixed price buy-sell that had not
been updated for 15 or more years. His estate received a price that was about
25% of the estimated value at the time of death. His widow’s financial
circumstance and lifestyle were significantly curtailed for the remainder of
her life.
Take some time, get good legal and business counsel and work
with your partners to review and update your buy-sell agreement. You will be
glad you did.
Regardless of what triggers your buy-sell, you should know in
advance that the result will be fair and its impact on the parties and
surrounding entities reasonable.
I would consider it a privilege to work with you and your
counsel on this important task. Give me a call.
Warm regards,
John R. Bise
Accredited Valuation Analyst
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