- Governance documents– Articles of incorporation, partnership, organization, bylaws or operating agreements frequently have Buy And Sell Provisions (BSP). Is critical that you change your agreement within these documents should you update to a formal BSA, so the language is consistent.
- Compensation based plans: Such as consulting agreements and salary continuation plans.
- Entity recapitalization: It is possible to recapitalize the ownership interests of the entity which could create differences and ownership interests.
- Gifts of ownership interest: this could change the ownership and voting rights.
- Charitable gift of ownership interest. Same as #5.
- Private annuities: You could transfer ownership of your interest to someone else in exchange for a promise to make payments for you for the rest of your life
- ESOP’s: EMPLOYER STOCK OPTION PLANS.
- Non-qualified deferred compensation plans.
- Qualifying for section 6166 deferral.
- Division of an entity.
- Confidentiality and non-competition agreements; In conjunction with a buy and sell buyout , the former owner could be paid to not compete with the entity and to keep secret all confidential trade secrets, customer lists, and other private proprietary information of the entity.
- Installment sales: The owner simply wishes to retire and sells the stock in exchange for promissory note that is payable overtime.
- Sale to outsiders.
- Public offering.
- New generation opening a similar type of business: This is where senior generation winds down and a new generation may open a similar business preferable to allow younger generations to open a new look but similar to the identical business of the old. The dying on the vine concept.
*A good read would be “Buy and Sell Agreements (US Legal Series); Paul L. Hood Jr. Also, I have included a link to article from Ed Partesi, ASA,CM&AA of UHY Advisors “Covering the bases: “The Need for Effective Buy -Sell Agreements”. Effective Buy and Sell Agreement!
Lastly, a very good book to read about the future of the selling your business, “Your Exit Map” by John Dini; This gives you a great insight as to the next generation of buyers and the market place for selling your business.