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Each business, or at least its ownership, has a life cycle and particularly with multiple owners it is important to consider at the business’ inception how the business may end or an owner leave. While the law provides a mechanism to end a business or one’s ownership, owners agreeing to some sort of buy/sell arrangement is preferred. Some of the factors to consider in drafting a buy/sell agreement include:

  • Valuation. Any agreement should include a method or formula to value the business at the time of the sale that may change over time and contain discounts or reductions.
  • Situation. The method and amount of payment may vary due to a particular exit circumstance, like an owner’s death, retirement or just leaving the business.
  • Payment. Timing of payments, interest and security should all be addressed, as well as enforcement and default remedies.
  • Sale Restrictions. Third party sales should be restricted and subject to the other owners’ approval.
  • Confidentiality. Limit the disclosure of information to potential buyers and the public that could harm the business.
  • Right of First Refusal. Allow the business or other owners the right to match third party offers and provide for pro rata purchasing. 
  • Funding. Address using business assets, life insurance or other financing, and determine what secures the balance due.
  • Escape Clause. If no buyer is found and owners cannot agree, provide a mechanism to resolve the deadlock and avoid litigation.
  • Costs. Identify the anticipated costs and who bears them.
  • Taxes. Consider each parties’ tax implications.
  • Protection. Consider protecting the business and its remaining owners.

If you have any questions or issues, please call on our experienced business lawyers to assist you.


This Brief is designed to provide our friends and clients with information regarding the various subject matters covered, it is not designed to take place of legal, accounting, or other professional advice.  If expert assistance is required, the services of a competent professional should be sought. This memorandum may constitute advertising under the rules regulating Illinois attorneys.

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Naperville, Illinois 60563

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