This article was originally published on EO’s Inc.com column.
Saul M. Simon, an Entrepreneurs’ Organization (EO) member from New York, is a registered representative and investment advisor representative of Lincoln Financial Advisors Corp., a broker-dealer (member SIPC) and registered investment advisor. We asked him about the importance of buy-sell agreements and how they can save your business.
Alex and Brad, both in their mid-forties, had just celebrated the tenth anniversary of Consulting, Inc., their market consulting business. The next morning, before going to work, Brad suffered a heart attack while jogging and died later that day. Alex suddenly lost his long-time business associate. What’s more, after the estate was settled, he found himself with a new co-owner — Brad’s wife.
The result was chaos. Brad’s wife had little interest or experience in running the firm. She needed cash for living expenses and asked Alex to buy out her interest in the business. But because most of his assets were tied up in the business, Alex was short of cash. Unfortunately, Alex and Brad’s wife were left with little choice but to sell the company on short notice for just a fraction of what they had hoped for. (more…)