Owners agree on a set dollar amount. It is simple but risky because it quickly becomes outdated if not updated annually.
The business sets aside liquid assets over time.
Borrowing funds when the event occurs, which adds debt to the balance sheet. Expert Perspectives
Explicitly naming all stakeholders and their current equity percentages.
The most popular method; it provides immediate liquidity when a partner dies or becomes incapacitated.
A hybrid approach where the owners wait until a trigger event occurs to decide whether the entity or the individuals will make the purchase. Valuation Approaches
The right structure typically depends on the number of owners and tax considerations:
