Help business owners prepare for the unknown future of their business.
Do your clients and prospects have a strategy in place to transfer their business to the right people, at the right time, and for the right amount? Having a well-funded buy-sell agreement in place can help protect the future of their business.
Principal® offers buy-sell strategies and a variety of funding methods based on your clients’ unique needs and characteristics.
Target market
- Business owners ages 45-65
- C corporations, S corporations, LLCs, partnerships, and sole proprietors
- Closely held businesses
- Owners who realize the importance of retaining their key employees during transition
- Owners who realize they may not be able to rely 100% on the sale of the business for retirement
When structured correctly, and funded with life and disability insurance, a buy-sell agreement provides a solid start to an exit plan, and those who depend on the future success of the business.
A properly funded buy-sell agreement offers the following benefits:
- Provides departing owners a market and price for an asset that might otherwise be hard to sell
- Enables remaining owners to prevent an unqualified individual from acquiring an interest in the business
- Minimizes business disruptions resulting from disagreements among owners at various triggering events
- Provides assurances to employees, customers, suppliers, and creditors that the business can remain competitive through owner transitions
Get started by reviewing . Then learn about the you can share with clients—cross purchase, entity purchase, and wait and see.
Which tax-exempt solution is right for your client?
Match prospects and their challenges with our solutions using the .
Solutions
Cross purchase buy-sell
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Sample agreements:
Entity purchase buy-sell
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Sample agreements:
Related:
Entity purchase buy-sell with short-year election
Multi-owner buy-sell
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Select Buy-Out PlanSM
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Business continuation LLC
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One owner (100% ownership) transition planning options:
- Sole owner transition plan
| - No sell buy-sell
| - One way buy-sell
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Employee stock ownership plans (ESOPs). Buy-sell strategy where a business establishes an employee-owned company and offers a flexible, tax-favorable way to exit the business, provide retirement benefits, and retain and motivate employees.
Related:
Buy-sell agreements involve the selling and buying of the departing owner’s business interests according to the terms of the formal agreement. This means money will be needed to complete the transaction when it occurs. So, it’s best to have a plan for securing that money—that’s where funding strategies come in.
There are basically five options for funding a buy-sell strategy: cash, loan, savings, installment sale, and/or insurance.
Solutions
Installment sale. This funding strategy involves the seller receiving one or more payments from the sale of the business. This can be effective to convert business interests to retirement income while spreading the gain from a sale over a period of time.
- Installment
| - Interest-only note
| - Lump sum
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Insurance solutions. We offer a variety of life insurance products as well as a disability buy-out product that can be used to fund a buy-sell agreement based on your client’s unique needs.
Life insurance product options | Disability Buy-Out insurance
Gifting. Funding strategy used to transfer business interests—potentially at a discount—from current owners generally to family members.
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Grantor Retained Annuity Trusts (GRATs). Funding strategy used for clients who want to transfer business interests with minimal gift and estate tax liability.
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Working with Principal®
We’re more than just products. It’s about the service you’ll receive from ÑÇÖÞÎÞÂëand the experience, education, and ease of doing business.
To get started, contact your internal sales team: 800-654-4278.