The repurchase agreement describes exactly what will happen to these shares if something were to happen, what the value of those shares would be and what would happen to the other partners. It is a comprehensive agreement that is essential to a company`s long-term success. This is the succession plan your business needs. A buy-sell contract is a legal document signed by all partners, owners and major shareholders of a company that explains what happens to the actions of one of these key players when they pass or are hindered. In the absence of a sales contract, a partner`s shares in a business will re-establish its estate and it may take years for the company to regain the value of those shares. The reality is that discussing contingency plans with business partners is just a smart business. Our business experts have coached many companies through the process of creating and financing sales contracts. It is a difficult subject that must first be addressed, but the reality of what might happen if there is no buy-and-sell agreement often leads everyone to talk about a good plan. It is always unpleasant to think of unfortunate circumstances, but it is good to prepare for all kinds of contingencies. A buy-sell contract, backed by good life and health insurance coverage, is the best way to protect your business in the future.
It can be part of your company`s succession planning and will also ensure that the family of the deceased or disabled key member is maintained fairly and equitably. A lawyer designs the sales contract, and then a risk expert puts the corresponding insurance coverage on it. Our corporate advisors are very good at structuring insurance to buy back buyout contracts, and we know we can help protect your family and your business for many generations. This money is then extracted from the insurance coverage and paid to the deceased or to the discount available to persons with disabilities. The buy-to-let agreement then indicates how these shares will be distributed and how the company will progress. In the unfortunate event that a counterparty or a large shareholder is obstructed or passed on, the terms of the sale contract will automatically come into effect. The company`s accountant has documented the number of shares held by the farewell member and then uses the buy-sell agreement to determine the total value of those shares. In almost all cases, a buy-and-sell contract is financed by life insurance that pays premiums by the company. In many cases, the disability portion of the contract is funded by disability insurance. Premiums for insurance that supports a purchase-sale contract can be quite expensive, but the cost, if they do not have this type of agreement, can be much higher. The literature shows that the use of formal and relational governance structures plays a fundamental role in managing and maintaining organizational relationships.
Nevertheless, there are opportunities for discussion on the composition and operation of these structures in the presence of different transaction characteristics. This is why a model based on the literature of formal contracts, interagency relations, relational contract theory and the saving of transaction costs is proposed. As this is qualitative exploratory research, six structured interviews were conducted and interpreted using a content analysis for case comparison and theoretical sentence discussion. It has been observed that certain transaction characteristics, when present at a higher intensity in the context of a transaction, tend to confirm the theoretical proposals of the formal contractual function, which shows that the intensity of these characteristics is a relevant factor in the analysis of the relevance of governance structures.