{"id":11111,"date":"2018-11-04T08:23:24","date_gmt":"2018-11-04T15:23:24","guid":{"rendered":"https:\/\/www.keytlaw.com\/azllclaw\/?page_id=11111"},"modified":"2018-11-04T16:06:44","modified_gmt":"2018-11-04T23:06:44","slug":"review-bsa","status":"publish","type":"page","link":"https:\/\/www.keytlaw.com\/azllclaw\/review-bsa\/","title":{"rendered":"The Ideal Time to Review Your Buy-Sell Agreement"},"content":{"rendered":"

by Richard Keyt<\/a> and Richard C. Keyt<\/a>, Arizona LLC attorneys who have formed 10,000+ Arizona LLCs and have 406 five-star reviews on Google, Facebook & Birdeye<\/a><\/p>\n

The time to review your multi-member LLC’s Buy Sell Agreement or Operating Agreement with buy sell provisions is NOW<\/span>!\u00a0 Do it before a triggering event occurs that will cause a buy out.\u00a0 You don’t want to find out after a triggering event that the Buy Sell Agreement has surprises that could have been avoided with a good review and modification to the Buy Sell Agreement.<\/p>\n

Warning #1<\/strong>:\u00a0 If your multi-member LLC does not have a Buy Sell Agreement or buy sell provisions in an Operating Agreement you and the other members are asking for trouble.\u00a0 Read\u00a0A Multi-Member LLC\u2019s Most Important Document<\/a>.<\/span><\/p>\n

Warning #2<\/strong>:\u00a0 If the members of your LLC signed a Buy Sell Agreement or an Operating Agreement that has buy sell provisions do not put it in a drawer and forget about it until a triggering event occurs that starts the buy out process.\u00a0 Buy Sell Agreements need to be reviewed from time to time and updated if necessary.<\/p>\n

Mercer Capital’s <\/strong><\/em>article<\/a> discusses a very important topic – when is the best time to review your company’s Buy Sell Agreement?
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“most business owners do not have a current understanding of the details and potential pitfalls that lurk within their own buy-sell agreements. Most view these agreements as obligatory legal documents that can be forgotten about until needed. Unfortunately, when a buy-sell agreement is needed it is too late to fix any problems within the agreement<\/strong>.<\/p>\n

For the past several years, Chris Mercer<\/a>, the CEO of Mercer Capital, has used the image of a ticking time-bomb as a metaphor of what might be awaiting some business owners within their buy-sell agreements. Would you ignore an actual bomb that was ticking away in your file cabinet? Of course not, and you should not ignore your buy-sell agreement either.”<\/p>\n<\/blockquote>\n

If your LLC has a Buy Sell Agreement or an Operating Agreement with buy sell provisions you and the other members must review it from time to time and update it if necessary.<\/strong><\/p>\n

#1 Reason to Review Your Buy Sell Agreement<\/strong><\/p>\n

The most common reason to review a Buy Sell Agreement is to make sure the valuation method works and its gives the members a buy out price they agree on.<\/p>\n

Warning #3<\/strong>:\u00a0 Make sure the person who prepared your LLC’s Buy Sell Agreement had the knowledge and skill required to draft a comprehensive state of the art Buy Sell Agreement.\u00a0 This is not a document you want to copy off the internet.\u00a0 Nor do you want the average lawyer to prepare your Buy Sell Agreement because he or she doesn’t know s*** from shineola about Buy Sell Agreements.\u00a0 Most lawyers grab a form from their firm’s form bank and run with it without understanding the many complex issues that arise in every Buy Sell Agreement. Most lawyers who prepare Buy Sell Agreements or Operating Agreements with buy sell provisions do not have the knowledge necessary to prepare a good agreement that will work properly.\u00a0 For more on this issue see “A Test to Determine if Your Buy Sell Agreement Sucks<\/a>.”<\/p>\n

The article explains the Six Things That Should Be Clear in Any Valuation Process Agreement<\/a>:<\/p>\n

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  1. Standard of value<\/li>\n
  2. Level of Value<\/li>\n
  3. The “as of” date<\/li>\n
  4. Qualifications of the appraiser(s)<\/li>\n
  5. Appraisal standards to be followed<\/li>\n
  6. Funding mechanisms<\/strong><\/li>\n<\/ol>\n

    If you are an owner of a valuable business that has multiple owners ask yourself the following questions:<\/p>\n

    1.\u00a0 Does your company have a Buy Sell Agreement?\u00a0 If not, why not?\u00a0 You and your loved ones could suffer severe adverse economic consequences unless the owners adopt a Buy Sell Agreement.<\/p>\n

    2.\u00a0 If your company has a Buy Sell Agreement how long has it been since it was reviewed?\u00a0 If your answer is more than one year it is time to review the agreement.<\/p>\n

    3.\u00a0 Do you understand all of the provisions in the Buy Sell Agreement?\u00a0 If not, you must take the time to understand the entire agreement and modify any language that is a problem.<\/p>\n

    Hire the Keyts to Prepare a Buy Sell Agreement for Your Arizona LLC<\/strong><\/h2>\r\n

    We prepare Buy Sell Agreements custom drafted specifically to meet the desires of the members of Arizona LLCs.\u00a0 Our Buy Sell Agreement is the end result of Richard Keyt preparing this type of business agreement many times since practicing law in Arizona since 1980.<\/p>\r\nWe have two prices for our custom drafted Buy Sell Agreement.\u00a0 The prices are:\r\n