How to market your business for a potential sale

Recently, a number of clients have engaged us to value their business because they do not have a firm grasp of what their company is worth and they are considering selling their interest in the near future. After we performed the assignment and met with the client to discuss the value drivers of their business, …

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Can Shareholders of a C-Corp be Subject to Taxable Income if They are Beneficiaries of a Life Insurance Policy?

A C-Corporation should always be the owner and beneficiary of a life insurance policy to avoid taxable income to the surviving shareholders. When contemplating the manner in which to fund a buy-sell agreement, life insurance is an extremely attractive option. A life insurance policy can provide liquidity when it is needed most upon the death …

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Estate & Gift Tax Valuations: Can the IRS Disregard an Agreed Upon Value for Shares in a Buy-Sell Agreement?

Section 2703 of the Internal Revenue Code enacted in 1990 states that buy-sell agreements are disregarded for valuation purposes, unless the agreement satisfies the following tests. Test One: The Agreement Must Constitute a Bona Fide Business Arrangement The buy-sell agreement (Agreement) cannot be a ploy to transfer shares to members of the family at a …

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Getting Clarity in Buy-Sell Agreements

Any business with multiple owners should have a buy-sell agreement in place.  Buy-sell agreements are entered into between the co-owners of a business to direct what should happen when an owner leaves the company.  A typical agreement covers such issues as who can buy the ownership interest, what triggers a buyout, what price will be …

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Buy-Sell Agreement: Part II

Value is addressed in the Buy-Sell agreement. It can be a fixed price, a formula to determine value, or a process to determine value. A fixed price is perhaps the easiest to understand and the most at risk of rewarding one party at the expense of another. It may be a reasonable measure of value …

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Buy-Sell Agreement: Part I

Buy-Sell agreements can be an important part of your business, and should be well thought out. They can have legal, tax and valuation ramifications, so you should consult experts in each of these fields when drafting or modifying a Buy-Sell agreement. Buy-Sell agreements can be used for several purposes. The agreement can provide a market …

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