Business ProtectionBuy-Sell Funding
An Agreement No One Funded Is a Promise No One Can Keep.
Most closely held businesses have a buy-sell agreement somewhere. Far fewer have the money to execute it.
The problem
The Document Exists. The Money May Not.
A buy-sell agreement sets out what happens when an owner dies, becomes disabled, retires, or leaves. It does not, by itself, produce the cash to buy the departing share.
When the trigger arrives, the agreement is only as good as its funding.
Why it matters
The Obligation Lands All at Once.
When an owner dies, the surviving owners may be contractually obliged to purchase their interest, often at a valuation set years ago, using cash the business does not have on hand.
The result is a negotiation between grieving family members and business partners, or a company taking on debt at the worst possible moment. Both are avoidable.
A stronger outcome
Payable, on the Day It Is Triggered.
A stronger position is an agreement that is current, has a credible valuation method, and is funded so the purchase can actually be completed without straining the business.
The family of the departing owner receives fair value promptly. The remaining owners keep control. Nobody negotiates under pressure.
- A valuation method everyone has agreed to in advance.
- Funding that matches the obligation it must meet.
- Ownership and beneficiary structure set deliberately.
- A transfer that closes cleanly instead of in dispute.
How we approach it
The Attorney Drafts. We Fund.
Your attorney drafts and updates the agreement and your CPA confirms valuation and tax treatment. Those are their decisions, not ours, and the details matter enormously.
Our part is making sure the funding is adequate and structured so the agreement can be carried out. We coordinate with your professionals rather than working around them.
Not sure how this applies to you?Takes about two minutes. Independent comparison, then a clear recommendation.
Protect Your BusinessPotential solution categories
Ways to Fund the Obligation
Structures to weigh with your attorney and CPA.
- 01
Cross-purchase
Owners hold policies on each other and buy the departing interest personally.
- 02
Entity-purchase
The business owns the policies and redeems the departing owner's interest.
- 03
Hybrid arrangements
Structures that allow a choice between the two when the trigger occurs.
- 04
Disability buy-out
Funding for a long disability, not only death.
- 05
Valuation review
Agreeing a method and revisiting it as the business changes.
- 06
Sinking fund or debt
Self-funding alternatives, with their own cost and certainty trade-offs.
Trade-offs worth understanding
Coordination Is the Whole Job.
This is where arrangements most often go wrong.
- Insurance does not create an agreement, and an agreement does not create funding. Both are required.
- Ownership structure affects taxes and outcomes and must be set with your attorney and CPA.
- Valuations go stale; an agreement priced years ago may no longer reflect the business.
- Cross-purchase arrangements grow complex as the number of owners increases.
- Guarantees are backed by the claims-paying ability of the issuing carrier.
Products that may be used
How This Gets Solved.
Depending on the situation, strategies may involve one or more of these. Which one fits, if any, depends on your circumstances.
Start with the gap
Make the Agreement Executable
We will review whether your agreement is current and whether it could actually be funded today, alongside your attorney and CPA.
Independent · Compared Across Carriers · Implemented Properly