Operating a business with a partner can be an extremely rewarding experience. However, there may come a day when you become engaged in a dispute with a business partner that cannot be resolved. When this occurs, there is a question of how the business can be adequately divided between the partners. If you need assistance with performing a buyout of a business partner, you should consult with an experienced Baltimore forced business buyout attorney today.
The Heyman Law Firm recognizes the many challenges faced by businesses, and we are here to alleviate your concerns. A buyout of a business partner in Baltimore is a complicated issue for all the owners of a company, and our firm can help you pursue a resolution. Do not allow your business to be negatively impacted due to the actions of a negligent partner. To schedule a confidential legal consultation to discuss your claim, contact the Heyman Law Firm at (410) 305-9287. You may also contact the firm online.
Factors Leading to Buyout Agreements
Buyout agreements or buy-sell agreements are often utilized by companies that have multiple owners. The buyout is necessary to divide shares or an interest in the business to an owner that is leaving the company.
It is important to note that a partner leaving the company is not the only reason that a forced business buyout may be needed. For example, if an owner of a Baltimore company passes away, the remaining members may have to create a buyout agreement in order to provide a surviving family member with the decedent’s share of the company. Other circumstances that can lead to a buy-sell agreement include:
- A business partner decides to retire
- One or more business partners have different views and goals for the company
- A business partner is going through a divorce
- The bankruptcy of one or more business partners
- An owner cannot engage in business decisions because of incapacitation due to a medical condition or a disability (e.g., Alzheimer’s, dementia)
This is not an exhaustive list. There are other circumstances that may lead to a buyout agreement.
If you are unsure about how to handle a buyout agreement, our firm can help you get started. To learn more about drafting a buyout agreement, continue reading and speak with an experienced Baltimore business law attorney.
Factors that Can Affect a Business Buyout in Baltimore, MD
When starting a business with other shareholders in Baltimore, the operating agreement must specify how to handle certain events, like the procedure to be taken to buy out a partner. That is why it is vital to examine the operating agreement before the initiation of a buyout agreement.
If the operating agreement is silent concerning the possibility of a business buyout, this may cause additional issues. The owners of the business may have to come to an agreement to determine how to handle the buyout. Alternatively, the owners may have to seek a resolution on this matter from the court if they cannot agree on how to handle a buyout agreement.
One of the most important factors that must be addressed by the operating agreement is how the company and the other shareholders will obtain the money to buy out a partner. There are multiple options available to businesses that need assistance when performing a buyout. For example, one possibility is that the company pays the departing owner with income from the business, or the remaining partners make a downpayment to the partner and continue on an installment plan. Another option is to use proceeds from a life insurance policy secured on behalf of the shareholder. Remember that the method of paying out the partner must conform with the guidelines set out in the operating agreement.
Another factor that must be considered is the value of the company prior to the distribution of the shares. Partners may disagree on how much the company is worth depending on the assets and liabilities of the company. If this happens, it may be wise to seek the aid of an appraiser. This individual or agency can look at a number of factors and arrive at a reasonable valuation of the business. While it may seem like an unnecessary expense, the use of an appraiser can help you avoid an extremely tedious process and time-consuming process.
Additionally, the debts of the business must also be apportioned before a buyout may occur. This can include encumbrances on the business or business loans that are not yet satisfied.
There are other alternatives to having a buyout of a business. For example, if one of the partners of the company was indispensable, it may be wise to wind up the business entirely. Additionally, if the operating agreement permits, an owner could sell their share of the company to a third party and begin a new venture.
If you need assistance evaluating your options for a forced business buyout, the Heyman Law Firm is here for you.
Contact Our Experienced Baltimore, MD Forced Business Buyout Lawyers Today
If you need legal assistance to manage a forced business buyout, you should consult with an experienced Baltimore forced business buyout lawyer. The legal team at the Heyman Law Firm possesses extensive experience litigating a variety of complex business law issues, and we would be honored to represent you. To schedule a confidential legal consultation, contact they Heyman Law Firm at (410) 305-9287. You can also schedule a consultation online.