Are you a buyer
or a seller?

A buy-sell agreement is a written commitment among the owners of a business about what happens to an ownership stake when an owner leaves. It names the events that trigger a sale, including a death, a disability, a divorce, a dispute, or a voluntary exit. It names who has the right to buy. It sets the method for arriving at the price. Most agreements also say how the purchase gets funded and over what period.

The point is to settle those terms while every owner is still on good terms and nobody knows which side of the transaction they will end up on. A death, a dispute, or a departure is a bad time to negotiate a number for the first time.

As soon as the business has more than one owner, and before any of them has a reason to leave. The agreement is easiest to write when nobody can predict who will be the buyer and who will be the seller, because that uncertainty keeps the terms even. Once an owner is sick, in a dispute, or holding an offer, every clause starts to favor somebody.

A single owner can need one too, usually when a key employee or a child is being brought into ownership, or when a lender asks what happens to the company if the owner dies. The question behind the document is short. If an owner stops owning tomorrow, who buys, at what price, and with what money?

Three approaches show up most often. A fixed price the owners agree on and restate each year. A formula written into the document, usually a multiple of earnings or of book value. Or a requirement that an independent appraisal be performed when a trigger event occurs. Each one trades certainty for accuracy. A fixed price is clear and goes stale fast. A formula is cheap to apply and can drift from what the business is actually worth. An appraisal is current, and it costs time and money at the worst possible moment.

Our work is testing the chosen method against market evidence before it is written in, so the number it produces still reads as defensible years later, to the owners, to a lender, and to the IRS.

It usually no longer describes the business. A formula set when the company was a fraction of its current size can produce a price that is far too low, or far too high, once revenue and the margins have moved. Fixed prices that were meant to be restated every year often stopped getting restated after the second one. Tax law has moved as well, and the structure that worked then may not work now.

Old agreements are worth reading on a schedule, not only when something happens. We review agreements already in place, reprice them against current numbers, and flag the clauses most likely to cause an argument. The review is shorter and cheaper than the dispute it heads off.

No. It matters just as much to the owner who intends to keep buying. If you expect to acquire a partner's shares one day, the agreement is the instrument that sets what you will pay and whether the business can fund it. A priced, funded agreement is also part of what a lender reads when the purchase of a partner's shares has to be financed.

Every owner is on a path to scale up or to transition out, and the flat ground in the middle is getting narrower as capital moves into smaller businesses and consolidation raises the competitive floor. Being a buyer does not mean acquiring tomorrow. Being a seller does not mean selling tomorrow. It means knowing which outcome you are preparing for.

The Utah County team, based in the Pleasant Grove office, handles buy-sell work most often, and they take it on for owners in Idaho as well. Cooper Norman has been a CPA and advisory firm since 1954, with six offices across Idaho and Utah, so the business valuation analysts, the tax side, and the audit and assurance bench all sit behind the same engagement.

We handle the financial side. Your attorney drafts the agreement. We set the valuation method, test the pricing against market evidence, model the tax consequence of the structure, and coordinate so the accounting and the legal language say the same thing. To start, call the Pleasant Grove office at (801) 406-3537.