Buy-sell agreements help protect companies' top assets

By Zillmer, Katy

Proquest LLC

Buy-sell agreements help protect companies' top assets and ensure shareholders are on the same page when changes occur.

The start of a new year is a good time for business leaders to review their company's processes, policies and financial documents to ensure smooth sailing in the coming months. As part of this review, owners should dust off their company records for succession planning and discuss any changes from the previous year or modifications to the plan they'd like to make in the coming months.

While it's important to review most pieces of your succession-planning portfolio on a regular basis, the buy-sell agreement is one document in particular company owners should review annually. Buy-sell agreements protect business owners when a co-owner wants to leave the company or passes away. Buy-sell agreements can also be a mechanism for business owners to pass the business or their value in the company on to a relative.

Buy-sell agreements are not unique to businesses specializing in accounts receivables management, but they are recommended for all companies in the industry, especially those with more than one shareholder, according to Brian Greenberg, founder and CEO of Greenberg Advisors in Rockville, Md.

"It's simply a good tool and a logical legal document for any kind of business to have in place to prevent disputes before they occur," Greenberg said. "Given that merger and acquisition activity in the ARM industry is outpacing 2013 activity by far, it's a wise choice to have potential areas of dispute resolved in a buy-sell agreement with your business partner."

In 2013, according to a report from Greenberg Advisors, accounts receivable management market mergers and acquisitions transactions reached $2.1 billion-a 33 percent increase from 2012 and the first time the total value exceeded $2 billion since 2007.

While trends in merger and acquisition activity in the ARM industry may fluctuate from year to year, there are constants in the process of developing a buy-sell agreement that companies can rely on over time.

The Agreement Process

Business owners should consider several factors when entering into a buysell agreement, including whom they want involved in the process. Changing the terms of an agreement after an owner decides to leave, for example, can be difficult, and shareholders should be on the same page before that or another change in ownership happens. Owners may want to consult with financial advisors and legal counsel, especially those with expertise in the ARM industry, to help them through the process.

For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall at Eric@EdisonAvenue.com or 239.738.6227. Also, visit our Edison Avenue website at www.EdisonAvenue.com or my personal website at www.BuySellFLbiz.com.