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A family business with 3 working stockholders, what questions should we be asking ourselves with regard to a buy sell agreement ? vz

Answer:

Dear vz - Some questions you might ask as three stockholders are: Does one person have controlling interest? I gather that all the stock is voting, and that there are no other inactive or non-voting stockholders. Can each stockholder distribute stock to whomever he/she wishes, for instance through estate planning documents? Or do the other two stockholders have the right of first refusal? If one stockholder chooses to cash out, how will his stock by divided? Equally? Or can one or the other partners thus achieve majority control? How will the buy-sell be funded? Has the funding strategy for the buy sell keep up with the true value of the company? Do the stockholders share openly their future plans, i.e., when they would like to retire, etc. I am not an attorney, as you may know, so as a business psychologist my focus is on how well the partners can communicate, resolve differences, pursue shared goals. Let me know if there are other aspects of your situtation you would like to discuss. Ellen

 

 
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