We are continuing our discussion of Buy-Sell Agreements. Keep in mind that the very best time to generate a formal agreement is at the beginning of a venture while everyone is in an optimistic mood and these issues are not “touchy.” This is when all parties are most likely to agree to an even-handed approach since everyone’s concerns are roughly the same. 

In the last article we discussed why it is so very important that a buy-sell agreement be drawn up at the beginning of a venture. It is simply because in the beginning, everyone is excited and confident in the success of the venture—if they were not, they would not be taking part. Everyone is in an optimistic mood and these issues are not “touchy.” This is when all parties are most likely to agree to an even-handed approach since everyone’s concerns are roughly the same.

This is the first in a series of articles on Buy-Sell Agreements. Who needs them? Well, everyone who has a joint venture, company or partnership with someone other than their spouse—even other family members in a family business or investment. This agreement should be an absolute necessity for any joint venture.  It can be thought of as a “pre-nuptial agreement” for the venture. The buy-sell agreement is even more important than the pre-nuptial in that with the pre-nuptial, both partners are sharing the same financial situation. With an investment or a business the partners have separate financial situations that can place different pressures on the venture.