A Florida buy-sell agreement controls what happens to your business when an owner leaves, becomes disabled or dies. Without clear terms, you and your partners can face disputes, valuation fights and delays that strain daily operations.
Florida law allows you to set rules for how ownership transfers in your business. A written agreement can make those rules clear before a triggering event happens.
Triggering events
Your agreement should define which events force a buyout. These include:
- Death: Your ownership may pass to family members without a clear plan.
- Disability: A long injury could leave your business short on staff.
- Retirement: You may want to exit at a set age.
- Divorce: Your interest can count as a marital asset.
- Bankruptcy: Your interest can become part of the bankruptcy estate.
Each trigger can call for a different response in your agreement.
Valuation methods
You can value your business with a fixed price, an earnings-based formula or an independent appraisal. Courts may enforce the valuation method your agreement states, even if it differs from market value. A stale valuation could create unfair outcomes for a departing owner’s family.
Purchase structure and funding
You can use a cross-purchase structure, where you and your co-owners buy the shares directly. You can also use an entity-purchase structure, where your company buys back the shares instead.
Florida’s transfer-restriction statute, Florida Statutes § 607.0627, lets your agreement set transfer rules. Owners may need to offer their shares to the company or other owners first. The law also validates a mandatory buyout clause for events like death or retirement. But the restriction cannot be manifestly unreasonable.
Funding often comes from life insurance, a cash reserve or installment payments. The right mix may depend on the size of your business and its cash flow.
Getting help with your agreement
Buy-sell agreements involve legal, tax and valuation details that can be hard to coordinate alone. An attorney can help you understand how these rules apply to your business.