What happens if a company finds it necessary to buyout an owner but cannot afford to do so?
This often happens when a buy sell agreement requires that an immediate, 100% lump sum be paid to an owner when it comes time for sale. Instead, it is often worthwhile to draft a more flexible payment scheme into the buy sell agreement. Instead of requiring a 100% lump sum, instead allow a down payment on buyout between 25 and 35% of the value of the ownership interest up front with installment payments coming after for a period of three to five years.
