A Successful Buyout Made Possible

Conflict between business owners is an unfortunate reality. Sometimes the conflict rises to a level where the owners consider separating. Determining who gets bought out and a fair price for the buyout is no easy task. The Business Advisory Group’s primary goal in these situations is to resolve the conflict amicably. A buyout should be structured so the departing owner is fairly compensated, and the business is able to continue operations without being crippled by the buyout payment obligations.

The Business Advisory Group helped the majority owner of a local business through this very situation. The conflict threatened the viability of the business, which was strapped for cash due to high inventory requirements for orders that would not generate revenue for some time. The business needed to expand its line of credit, and with the owners at a deadlock, that was not a possibility.

The Business Advisory Group swiftly and creatively proposed and came to terms with the other owner’s counsel. A buyout acceptable to both sides was completed. Crucially, the buyout was affordable to the business, enabling it to expand its line of credit and continue its operations without resorting to drastic measures. More than two years later, the business is stronger, generating more revenue than ever, and the departed owner is fully paid. Thanks to the Business Advisory Group, this business is thriving and employing many people in the Philadelphia area.

Questions Every Business Must Ask

Q. Has your business recently reviewed its legal structure to determine whether it is set up in the most advantageous manner for legal and tax purposes, considering recent developments and changes in the law?

Q. Do the owners of your business have a current, updated buy-sell agreement which controls how ownership interests in the business are to be transferred in the event of an owner’s death, disability or termination of employment?

Q. Have the owners of your business developed a succession plan to define how ownership and authority will transition upon the death or retirement of the present owners?

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