Business Buy/Sell Agreements
Protect your business and its owners in the event of a partner's death or departure.
Protected Longevity for Your Business
Business buy/sell agreements can safeguard the future stability and continuity of your business. They are designed to provide the necessary funds to execute a buy/sell agreement when your co-owner exits the business due to events like death, disability, retirement, or disagreement.
Without this insurance, your business may face financial turmoil, disputes, or even dissolution. Such agreements ensure a fair and orderly transfer of ownership, protect the interests of all parties involved, and maintain business operations seamlessly.
Manna Insurance will help you secure buy/sell agreements insurance so you not only protect your investment but also ensure the long-term viability and prosperity of your enterprise, providing peace of mind to you and your stakeholders.
So what coverage do I need?
Peace of Mind for Business Owners and Their Families
Life Insurance
Life insurance is commonly used in buy/sell agreements. Each business owner takes out a life insurance policy on themselves, with the other owners as beneficiaries. In the event of a co-owner's death, the policy payout provides the surviving owners with the funds needed to buy the deceased owner's share of the business.
Disability Insurance
Disability insurance can be part of a buy/sell agreement, especially for businesses with multiple owners. If one owner becomes disabled and unable to work, the insurance provides income replacement, ensuring the business can continue running smoothly.
Key Person Insurance
While not part of a traditional buy/sell agreement, key person insurance can be crucial for businesses heavily reliant on one or a few key individuals. If a key person passes away or becomes disabled, the policy provides funds to offset the financial impact and hire or train a replacement.
Funding Mechanisms
Buy/sell agreements typically use one of three funding mechanisms: entity purchase, cross-purchase, or hybrid. Insurance is closely tied to these mechanisms, as it determines how the funds for the buyout will be generated.
Ways to Save on Business Buy/Sell Agreements
Just like any insurance, rates can vary among providers. Manna will help you obtain quotes from multiple insurance companies, and carefully compare coverage options and premiums to find the most cost-effective policy that meets your specific needs.
Shop Around
Periodically review your business buy/sell agreement to ensure it accurately reflects the current value of the business and the roles of each partner. Updating the agreement can help align coverage with your business's actual circumstances.
Regular Review
Consider Funding Alternatives
Explore alternative methods of funding your buy/sell agreement, such as life insurance policies on the owners involved. Carefully assess the financial implications of different funding options to determine which offers the best value and cost savings for your business.
Frequent Questions About Business Buy/Sell Agreements
Insurance can be complicated and confusing. We’re here to help answer your most common questions about business buy/sell agreements insurance coverage.
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A business buy/sell agreement is a legally binding contract among business owners that outlines what happens in various scenarios, such as the death, disability, retirement, or voluntary exit of one of the owners.
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Buy/sell agreements provide a clear roadmap for handling ownership transitions, ensuring business continuity, protecting the financial interests of owners and their families, and avoiding potential disputes.
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Insurance, such as life insurance and disability insurance, often funds the buyout of an owner's share as specified in the agreement. It provides the necessary financial resources for the remaining owners to purchase the departing owner's stake.
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In an entity purchase agreement, the business entity itself purchases the departing owner's shares. In a cross-purchase agreement, individual owners buy the departing owner's shares. The choice between these structures impacts how insurance is used to fund the buyout.
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Buy/sell agreements typically specify a method for valuing the business, which can include using a formula, hiring a business appraiser, or agreeing on a fixed price. The valuation method should be clearly outlined in the agreement.
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Yes, some businesses have multiple buy/sell agreements to address different triggering events or scenarios. For example, there may be separate agreements for retirement, death, and disability.
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In many cases, premiums for life insurance policies used to fund buy/sell agreements are not tax-deductible for the business. However, the tax implications can vary depending on the specifics of the agreement and the insurance policies.
More Coverage Options
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Employee Benefits
Healthy employees, healthy operations. Keep your team feeling good with strong medical and benefit plans in reach.
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Life Insurance
Secure your legacy with comprehensive life insurance solutions for you and your family.
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Business Insurance
Safeguard your business with tailored insurance solutions to keep your operations running smoothly.
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