2004 Business Markets Program

If you had died last night…how would these questions be answered today? Who is running the business? To whom do they report? How will your spouse get income? Who will pay creditors? Are the bank loans personally guaranteed? Are there partners? What will the partners want? Will your business interest be sold? Will your partner(s) buy? At what price? Where will they get the cash? Is this what you want?

Could this happen in your board room? Youthful heirs aren’t so bad, but when they use their inheritance to vote themselves into a position of authority, it will change the direction of your business. Don’t allow outsiders to walk into your business. Maintain control with a well structured Buy/Sell agreement which is reviewed and updated at least every three years.

You have the obligation…. Now where do you get the funding? I.Cash Make installment payments? Write a cheque for the full amount? II.Borrowed Funds III.Sinking Fund IV.Life Insurance

How much is your business worth? Partnership or Corporate Tax Return Operating Statements  Balance Sheet  Profit and Loss Statement Fire Insurance Policies Audited Financial Statements Terms for Existing Agreement established by partner(s) Partners who generate new revenue

Problems you and your business will encounter if your partner suffers a Long Term, Serious Disability. Without both of you: Future growth may be compromised. Productivity will be lost. Increased expenses are inevitable. A valuation dispute is likely. And the major potential problem… Where will the after-tax funds come from to buy out a disabled partner?

Is there a missing page in your Buy/Sell Agreement? What does your agreement say if your partner suffers a critical illness or disability? You might be willing to do all the work for one-half the profits for a year or so, But would you for:  2 Years?  3 Years?  4 Years?  5 Years ?