Family Business Survival

How Buy-Sell Agreements Can Resolve Common Crises

By John Yoswick

A California-based family business was facing the worst crisis in its history. Not only was its founding patriarch and CEO starting to exhibit signs of mental deterioration, but his erratic behavior was threatening the bottom line. Business decisions were being neglected. Customers were being mistreated. Top employees were headed out the door.

With the future of their company at stake, the other family members at the third-generation enterprise realized they needed to find answers to three questions: How could they convince the CEO to relinquish control before he damaged the organization irretrievably? Who would shoulder his responsibilities? And where would they find the money to purchase his corporate shares? 

Buy-sell agreements

Our opening story is not unusual. Family businesses everywhere can find their future imperiled when a critical shareholder can no longer exercise managerial duties. Sometimes the cause is physical or mental disability. Other times it is an unexpected death, resignation, termination, retirement, or divorce. 

Luckily, the California business was able to resolve its crisis by resorting to a tool available to family businesses everywhere. A document called …

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