One of the most important matters to be addressed in a closely held business is an exit strategy from the business. For instance, what should happen in the event of the death of an owner or the business? Can his or her interest be transferred to his or her heirs, or should the business partner have the option (or the obligation) to buy the decendent's interest? If so, at what price should the interest be bought and upon what terms? Furthermore, if the interest will be purchased by the business partner, will the business partner have sufficient funds to purchase the interest? If not, should the partners purchase life insurance on each other? Similar questions also arise in the event of the disability of a closely held business owner.

Another important consideration is whether or not a business owner should have the ability to transfer his or her ownership interest in the business freely. If there will not be a right to transfer the property freely, should transfers be permitted to family members during lifetime or at death? Similarly, does it make sense to include a right of first refusal?

Another consideration is whether or not a business owner will have the right to force the other owners to buy him out in the event that he wants to get out of the business, or whether he will have the right to force the other owners to sell their interests to him. This allows for an exit strategy in the event that the relationship among the business owners deteriorates for any reason.

Planning for an exit strategy is something that should be considered at the time the business is created, if at all possible. At Blasingame, Burch, Garrard & Ashley we have the expertise to help you negotiate an appropriate exit strategy for a closely held business.