A purchase sale agreement determines when and to whom you can sell your share of the business and sets a fair price. How you structure your sales contract will determine who will buy the outgoing owner`s shares, how much the buyer will pay and how the sales contract will be put in place. There are four common buying structures: If you need help with cross-purchase vs. purchase sales, you can publish your legal needs on upCounsel-Marktplatz. UpCounsel only accepts the top 5% of lawyers on its website. UpCounsel`s lawyers come from prestigious law schools like Yale Law and Harvard Law and typically have 14 years of legal experience, including working on behalf of or with companies like Airbnb, Menlo Ventures and Google. A cross-purchase agreement is a document that allows partners or other shareholders of a company to acquire the interests or shares of a partner who dies, becomes unable to act or retires. The mechanism often relies on life insurance in the event of death to facilitate this exchange of values. A cross-purchase contract is usually used in continuity planning, with the document describing how actions can be shared or acquired by the remaining partners, for example. B a proportional distribution based on each partner`s participation in the company. A cross-purchase plan requires shareholders to acquire and hold life insurance from other shareholders. The value of the insurance proceeds must be the value of the other person`s ownership units. If a shareholder dies, the proceeds of the insurance are used to acquire the shares of the deceased`s property of the family or estate.
Life insurance can play an important role in all of these plans by providing guaranteed funds for purchase as long as the necessary premiums are paid. How do they work? In the traditional cross-buy-back contract, each business partner takes out life insurance for the other partners within the company and claims to be the beneficiary of these policies. When a partner dies, one or more beneficiaries can use the life insurance proceeds to acquire the deceased partner`s ownership. In this way, key partners or individuals can pursue and manage the business smoothly, and the heirs of the deceased partner will receive a fair and agreed price for the ownership units.