Business Planning

Buy/Sell Funding Options

There are several steps to consider when funding a buy/sell agreement.  Using life insurance to fund makes it necessary to consider large parts of the planning pre-mortality, when emotions are low and all business owners are present.  Below are two examples of buy/sell funding that we have seen.  In these examples, implementing life insurance takes a lot of the stress away from the business owners as they’re grieving their partner and determining the next steps for their business. 

The deceased business owner’s heirs might not be as generous to the business continuation as the business owner would be in life, so it is important to continually update the business valuation as the business grows or shrinks.  Implementing additional life insurance coverage as the business grows can be done to ensure the business will be made whole after the buyout of one of the deceased business owners. 

Buy/sell funding can be done through life insurance with discounted dollars by way of premium payments instead of extracting value from the business after an owner has passed away.

Contact me if you have any questions or would like to explore buy/sell funding further for one of your clients.