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Business Succession Planning

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Carefully drafted buy-sell agreements help establish fair market value for federal transfer tax purposes and they have the ability to maximize the value of closely-held businesses. This is especially true if an independent valuation analyst assists in the determination of the value, not just for tax valuation purposes, but for purposes of the buy-out transaction itself. Recent court cases have held that the reasonableness of the valuation performed would be assessed based on the factors in existence on the date the agreement was reached versus the facts in existence on the date of death.

Some purposes of a buy-sell agreement may be to provide:

· continuity to the business;
· the corporation with the funds necessary to purchase the shares of stock owned by a decedent shareholder and;
· a method for the shareholders' spouses to receive sufficient income while allowing the spouses to get out of the business.
Business Succession Planning Pennsylvania

Dorazio Law Group, P.C. can assist you with your legal needs in drafting the appropriate provisions into the buy-sell or shareholders' agreement based upon your company's individual needs. The firm involves the Certified Public Accountant early in the process to determine such choices as whether the assets should be valued at current or historic values and whether LIFO or FIFO should be used in valuing inventories.

Another legal consideration in this area involves minority shareholders. Each state provides certain statutory rights and remedies for minority shareholders. Majority shareholders have many techniques to discourage and eventually freeze out minority owners and judicial protections alone are not sufficient to be relied upon.

For details, please contact Dorazio Law Group, P.C., at 724-934-6325 or email at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .