Small Business Transition
As a small-business owner, you spend your time and energy serving your customers and taking care of daily operations. Your commitment and work ethic have built your business to what it is today. But what would happen if you or another owner died prematurely, became disabled or wanted to retire? A small business transition strategy can help you control and protect the future of your business.
Farm Bureau Financial Services can help you explore a variety of different products that can support your needs. To review your unique situation with an agent, find one near you today.
Small Business Buy-Sell Agreement
One small business transition strategy to consider may be executing a buy-sell agreement. A buy-sell agreement gives you the opportunity to negotiate a fair purchase price for your business while you (and your partners) are alive and well.Considering this small business transition strategy today while you're healthy and your business is thriving can benefit you, your family and your business.
Benefits for You and Your Family
A buy-sell agreement can help avoid the problems that occur when a business owner dies. Funded with life insurance, this agreement provides a variety of benefits for your family:
- Can help prevent conflicts with surviving business owners
- Assures a fair market price for the business
- Creates a guaranteed buyer for what might otherwise be an unmarketable asset
- Provides cash for your family, which can replace income lost from your business and help ensure your family's financial future is not tied to the fate of the business
Benefits for Your Business
Funded with life insurance, a buy-sell agreement provides many benefits for your business:
- Allows you to maintain control of the business by assuring surviving owners have funds available to buy the deceased shareholder's interest in the business from his or her estate
- Can assure orderly transfer of the business upon your death and allow surviving owners to fulfill obligations to your family
- Can help prevent conflicts and disputes by protecting your business from abrupt drop in value that can follow the loss of a key partner
- Can help employees and creditors feel more confident about the future success of your business
Options for Those Without a Business Heir
If you do not have a business heir or a next generation owner, you may want to consider a 1031 Exchange. Talk with your advisers about establishing a strategy for the transition of your small business, such as a buy-sell agreement or a 1031 Exchange.
Talk with a Farm Bureau agent and your advisers about establishing a small business transition plan today.
