Business ownership has been trending toward combinations or multiple related and unrelated parties because of the increased practical need for accessibility to resources, differing capabilities, niche visions and differing levels of persistence to be successful in an ever-changing business environment.
The dynamics of these two business ownership structures are different. While the patriarchs of family-owned businesses may generally work at a tolerant pace to achieve successful multi-generational ownership succession, the universal chorus for unrelated business owners usually is they do not desire to continue in business with one’s spouse or family. Family patriarchs find themselves in the identical position when need to escape because the implementation of a succession plan unexpectedly becomes unattractive or unworkable.
Both family-owned and businesses composed of multiple related and/or non-related owners, however, need succession and buy/sell agreements to outline who succeeds to leadership and ownership in the event one dies, becomes disabled, quits or retires. Those agreements also need to place enforceable restrictions on the sale and transfers of ownership interests within the ownership group and third parties.
The toughest discussions I have with business owners when formulating their agreements is how they address a dead-lock in the decision-making process or a paralysis caused by changes in personalities, circumstances and perceived or actual breaches of trust. It will never happen to us as business partners is a fable.
Purchasing the ownership interest of the departed or departing party by the company and/or remaining owners is the most common course or action. The obstacle is that the company and buying owners and selling party are naturally at odds over the price and the pace at which money is paid out. Buy low and sell high is the universal starting point of most of these discussions when assembling buy/sell agreements for differing owners or curing a succession plan that has gone awry. Sources for the funds necessary to bring the plan to life and survive through fruition needs an experienced practical and innovative hand to assist in the formulation and intervene with the parties to reach an amicable and practical agreement.
My experience in structuring succession and buy-sell agreements for owners in all lines of business can set a well-reasoned, stable and efficient platform in the early stages of your business planning for resolving and concluding differences that may develop in the future between business partners.