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Dave's DI Dispatch , Breaking News
Dave’s DI Dispatch: Vol. 25
Informal business valuation and buy-sell review
Could your business continuation plan be stronger?
Having a buy-sell agreement is a very smart move. It helps set the groundwork for making sure your business continues as planned when you or another owner can no longer maintain ownership.
But as your business evolves and grows, it’s important to make sure the agreement continues to align with the vision for your business.
Ask yourself these questions:
Does the agreement protect you during both planned and unplanned events such as disability, death, retirement, divorce and termination?
Does the agreement specify a mandatory buy-out if an owner becomes disabled or dies? Keep in mind that if it doesn’t, there may not be a buyer for his or her shares.
Is the agreement properly funded with both life and disability buy-out (DBO) insurance?
Make sure the provisions in the agreement and insurance policy terms are consistent.
Confirm you have enough coverage in place.
Make sure the agreement lists the disability buy-out and life insurance policies to quickly identify them.
Do you know the value of your business? Are you comfortable that it reflects fair market value?
What purchase price is listed in the agreement? Does it align with your business’ current value and the amount of insurance you have?