It’s a fundamental concept. You want to protect your wealth when you exit your business. So many of the blogs, articles, and writing we do here at McBride for Business, LLC (www.mcbrideforbusiness.com) can be tied to this theme. It’s something you want to keep in mind throughout the business process. Regardless of what you’re doing, you want to think about how your wealth is going to look when you exit the business.
We talk a lot about business partnerships (http://www.mcbrideforbusiness.com/blog/key-issues-in-pa…ership-formation/). One of the fundamental issues when entering a business partnership is making sure wealth is protected upon exit. It’s rare that business partners are going to want to exit the business at the same time. Sure, maybe you might have that great third-party offer that cashes everyone else out at the same time, but often people are going to retire at different times, they’re going to move on to different businesses at different times or they might hit the point where they start to disagree. We’ve talked in earlier blogs about the fact that disagreement is just a reality of business partnerships, (http://www.mcbrideforbusiness.com/blog/finding-the-righ…inding-a-partner), so you want a plan to protect your wealth from the beginning. You want to put systems and processes and things together within your partnership structure to make sure the wealth is protected regardless of what happens.
What does this mean in the real world? What practical steps do you take in your agreements?
It means having buy-sell provisions in your partnership agreement, knowing that things may evolve, the partnership may change and that the business partners may go in different directions. If you have the right terms in your agreement, each partner can go in different directions, and the wealth can be preserved. The exiting partner can get a pay day, and the remaining partner can continue the business. What we don’t want to do is end up in a severe disagreement where the partnership stops moving forward, the business is sidelined, and there’s a fight in the courthouse.
Think early about getting those processes in place. Think constantly about how the wealth is protected. The protection is good for everybody. If the partnership can change and the partners can evolve without having to go to costly litigation or other problems, it’s a win for everybody.
What have you built in your partnership agreements to protect you? How are you keeping your partnership evolving? Join us in the comments below and let us know.
Make sure you download our free checklist to assess your business: www.mcbrideforbusiness.com/BlogGift
This posting is intended to be a tool to familiarize readers with some of the issues discussed herein. This is not meant to be a comprehensive discussion and additional details should be discussed with your attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. Each case is unique. Past results do not guarantee future outcomes. This article should not be treated as legal advice to any person or entity. Freeimages.com/photographer Manuel De La Pena .
About the Author
R. Shawn McBride is the Chief Innovation Officer at McBride For Business, LLC. His signature keynote, The 3 Laws of Empowerment (www.rshawnmcbridelive.com/3laws), gives audiences an entertaining look at how they can prepare, plan and protect themselves. You can reach R. Shawn McBride at email@example.com or (214) 418-0258.
Get Shawn’s latest book: www.mcbridebook.com
Add us on Twitter: @McBrideForBus #McbrideForBusiness #3LawsofEmpowerment
Like us on Facebook: https://www.facebook.com/mcbrideforbusiness/?fref=ts