Examines business owners’ agreement to allocate control after death of principal. Purpose, types, valuation, funding, taxation.
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Closely held corporations (those with only a few stockholders) are becoming increasingly more common as more and more Americans begin their own small businesses. While these types of businesses are a critical part of the economy, and while they can offer considerable opportunity to their owners for success, they pose problems in the event of the death or disability of one of the key members of the corporation. Because of this, buy-sell agreements have been implemented in order to protect businesses and their stakeholders against this type of loss. This research examines buy-sell agreements, including the various types of agreements, when they are appropriate, and tax considerations.