Have you thought about the possibility of your co-owner’s losing his/her license that is absolutely required by the job? When the owner loses a necessary license that he/she needs to do the job, that owner won’t be allowed to work anymore by state law. For example, without a veterinarian’s license, a veterinarian can’t legally treat animals in any state. What will happen to your own business if your co-owners lose the professional license, thus making themselves out of job for a year or more?
Will the owner have to offer his/her interest for sale back to the company? Most states have the law that will require this license for some professions. Some other states don’t address this issue specific to the job. But regardless, it is always good practice to address this kind of situation in the buy sell agreement in order to deal with how much the departing owner’s interest would be worth and what sort of payment options are required.
The loss of license provision is what you would want to specify in the buy sell agreement. That way, the agreement will require your co-worker to sell his/her ownership interest back to the company or remaining co-owners in case he/she gets the license suspended or revoked for any reason. This provision will protect the company owners from having to share the company’s profits with somebody with no capability of working anymore.
Furthermore, you may want to specify the condition where the company or remaining owners can pay less than the full value of the interest that is from the leaving owners who lost their valid license. This is because the remaining owners are responsible for operating the company that may have hurt the company’s reputation or lost the clients accordingly. Another way would be to provide a new appraisal of the company’s value to the up to date, thus re-establish its current worth based upon what now just happened to the company.
If you are considering a future maintenance of your own company, then a Buy Sell Agreement is very importance legal form to review. It is used to protect your own assets and specify your legal rights towards your company as a co-owner.
For more information about legal documents, go to Legal Forms site, where you can find many free legal forms and resources including buy sell agreement forms that you can use to help secure your own company and assets.