According to the Small Business Administration, there are nearly 30 million private companies in the United States, of which nearly 6 million have several employees. The owners of many private businesses are baby boomers (people born between 1946 and 1964) who are now at an early stage of a massive transition from work to retirement. As this transition dawns, many small and medium-sized enterprises (SMEs) will be sold or transferred to the next generation of owners. It is important that a company with multiple owners has a sales contract, but the time to create such an agreement is not during a change of ownership, but from the beginning, when all owners are involved and an orderly transition can be planned. The purchase and sale agreement assumes that the shares are sold according to a specific formula to the company or other members of the company. In the absence of a buy-back agreement, business owners may face these and other scenarios that could disrupt the business and damage its value. For a corporate controller, fair value may mean that certain valuation discounts should be applied to the value of an uncontrolled or “minority” stake. These discounts reflect the non-dominant nature of the interests and may also reflect the lack of marketing of an interest in a private company. When these discounts are applied, the value of a non-dominant interest is significantly less than the value of a dominant interest. To avoid pitfalls in the development of sales and sale contracts, contractors should consult with both lawyers and accountants and appraisers to ensure that the language of the purchase-sale contract is intended for owners and that all owners understand the impact of these definitions. It`s clear, yes. The cost and timing of a repurchase agreement is minimal compared to its benefits. A well-thought-out, well-funded buy-sell contract will continue to fight against co-owners and family members and will help the company run a reliable business and keep intact employees and supplier relationships for one of its owners in the midst of a major life event.

And the value of the company will not be threatened with forfeiture due to a possible shareholder dispute between family members.