[et_pb_section fb_built=”1″ _builder_version=”4.16″ global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_row _builder_version=”4.18.0″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” hover_enabled=”0″ global_colors_info=”{}” theme_builder_area=”post_content” custom_padding=”0px||0px||false|false” width=”100%” sticky_enabled=”0″][et_pb_column type=”4_4″ _builder_version=”4.16″ custom_padding=”|||” global_colors_info=”{}” custom_padding__hover=”|||” theme_builder_area=”post_content”][et_pb_text _builder_version=”4.16″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” global_colors_info=”{}” theme_builder_area=”post_content”]Owners of small businesses enter into buy\/sell agreements with their partners to protect their interests in their largest investment, their business.\u00a0 The presence of such an agreement is essential to ensure a clean succession and to protect heirs.\u00a0 We applaud the efforts, but not always the process or results.<\/p>\n
Much time is spent agonizing over details. Elaborate definitions of earnings are created; multipliers are agreed upon; the requirement for discounting is debated.\u00a0 All these factors, and others, are agonized over.\u00a0 Countless hours spent and professional fees incurred to arrive at a plan deemed acceptable to all, a daunting task.<\/p>\n
Creating a hard-and-fast formula for a buyout can be a mistake.\u00a0 Businesses evolve. \u00a0Products change, services are added or deleted.\u00a0 The nature of the business itself can change.<\/p>\n
The lifetime of a small business can span many years or even several decades.\u00a0 The nature of our economy, and our society, has changed significantly over these periods.\u00a0 Not long ago, a garment manufacturer designed, manufactured and distributed their products from their own facility in the U.S.\u00a0 Today, they are, in essence, distributors.\u00a0 While they design and distribute, manufacturing takes place overseas.\u00a0 With smaller companies, these contract manufacturers are not captive to them, adding a layer of complexity and cost.<\/p>\n
Industries have changed in other ways.\u00a0 SEC regulation of hedge funds, the emergence and disappearance of Blockbuster in a matter of a few decades are milestone changes in industries that just recently started. The onslaught of iTunes, Spotify and Pandora in the music industry has led to the virtual end of sales of albums.\u00a0 Uber threatens to end the taxi and limo industry as we know it.\u00a0 Just two examples of major upheavals in traditional industries we never considered would change.\u00a0 Formulas set even just a few years ago may no longer be relevant.<\/p>\n
A better and more cost-effective solution for a buy\/sell is to appoint a valuation firm to handle the project.\u00a0 A baseline valuation is performed which is then updated every one, two or three years.\u00a0 In some cases, no update to the baseline valuation occurs until a triggering event happens.\u00a0 In either case, appointing a firm that all partners agree to can avoid dissension at a critical and often emotional time.<\/p>\n
Designing a buy\/sell should be an integral part of an operating agreement.\u00a0 An attorney and a tax specialist ought to be consulted.<\/p>\n
At JBV, we are here to assist you.[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section]<\/p>\n","protected":false},"excerpt":{"rendered":"
Owners of small businesses enter into buy\/sell agreements with their partners to protect their interests in their largest investment, their business.\u00a0 The presence of such an agreement is essential to ensure a clean succession and to protect heirs.<\/p>\n","protected":false},"author":4,"featured_media":433,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"on","_et_pb_old_content":"Owners of small businesses enter into buy\/sell agreements with their partners to protect their interests in their largest investment, their business.\u00a0 The presence of such an agreement is essential to ensure a clean succession and to protect heirs.\u00a0 We applaud the efforts, but not always the process or results.\n\nMuch time is spent agonizing over details. Elaborate definitions of earnings are created; multipliers are agreed upon; the requirement for discounting is debated.\u00a0 All these factors, and others, are agonized over.\u00a0 Countless hours spent and professional fees incurred to arrive at a plan deemed acceptable to all, a daunting task.\n\nCreating a hard-and-fast formula for a buyout can be a mistake.\u00a0 Businesses evolve. \u00a0Products change, services are added or deleted.\u00a0 The nature of the business itself can change.\n\nThe lifetime of a small business can span many years or even several decades.\u00a0 The nature of our economy, and our society, has changed significantly over these periods.\u00a0 Not long ago, a garment manufacturer designed, manufactured and distributed their products from their own facility in the U.S.\u00a0 Today, they are, in essence, distributors.\u00a0 While they design and distribute, manufacturing takes place overseas.\u00a0 With smaller companies, these contract manufacturers are not captive to them, adding a layer of complexity and cost.\n\nIndustries have changed in other ways.\u00a0 SEC regulation of hedge funds, the emergence and disappearance of Blockbuster in a matter of a few decades are milestone changes in industries that just recently started. The onslaught of iTunes, Spotify and Pandora in the music industry has led to the virtual end of sales of albums.\u00a0 Uber threatens to end the taxi and limo industry as we know it.\u00a0 Just two examples of major upheavals in traditional industries we never considered would change.\u00a0 Formulas set even just a few years ago may no longer be relevant.\n\nA better and more cost-effective solution for a buy\/sell is to appoint a valuation firm to handle the project.\u00a0 A baseline valuation is performed which is then updated every one, two or three years.\u00a0 In some cases, no update to the baseline valuation occurs until a triggering event happens.\u00a0 In either case, appointing a firm that all partners agree to can avoid dissension at a critical and often emotional time.\n\nDesigning a buy\/sell should be an integral part of an operating agreement.\u00a0 An attorney and a tax specialist ought to be consulted.\n\nAt JBV, we are here to assist you.","_et_gb_content_width":"","footnotes":""},"categories":[5,8],"tags":[],"class_list":["post-401","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-blog-entries","category-corporate"],"_links":{"self":[{"href":"https:\/\/jbval.com\/wp-json\/wp\/v2\/posts\/401","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jbval.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jbval.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jbval.com\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/jbval.com\/wp-json\/wp\/v2\/comments?post=401"}],"version-history":[{"count":0,"href":"https:\/\/jbval.com\/wp-json\/wp\/v2\/posts\/401\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/jbval.com\/wp-json\/wp\/v2\/media\/433"}],"wp:attachment":[{"href":"https:\/\/jbval.com\/wp-json\/wp\/v2\/media?parent=401"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jbval.com\/wp-json\/wp\/v2\/categories?post=401"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jbval.com\/wp-json\/wp\/v2\/tags?post=401"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}