Future-Proof Your Company With a Solid Agreement

If you own a propane business with one or more partners, a clear and well-written buy-sell solid agreement is one of the most important documents you can have. This is about protecting your company, your family, and your investment. Life happens. Whether someone retires, passes away, or decides to move on, a buy-sell agreement lays out exactly what happens next. Without one, you could end up in a legal mess, stuck with a partner you didn’t choose, or even forced to sell your business under bad terms.

This document doesn’t need to be complicated, but it must cover the right details. The best time to create one is before there’s a problem. That way, when something does happen, everyone knows what to expect. It gives all partners peace of mind, knowing their families and the company will all be properly protected.

Clarify Who Can Buy and Sell Shares
A solid buy-sell agreement lays out exactly who can buy an owner’s share of the business – and who cannot. It defines what happens if one of the owners wants to leave, retires, becomes disabled, or passes away. You want to avoid situations where ownership falls into the hands of someone who is unfamiliar with propane operations or who is uninterested in keeping the company strong. By defining who can purchase shares – whether it’s a co-owner, family member, or third-party buyer – you’re keeping control of the company in the right hands.

Set a Fair Method for Business Valuation
When it’s time to sell a share of the business, the biggest question is how much that share is worth. A good buy-sell agreement will explain how the business will be valued.
You can use a fixed price, a formula based on revenue or assets, or an outside appraiser. The key is to emphasize consistency and fairness. By writing down this process ahead of time, you will do much to reduce confusion and hard feelings when emotions are running high.

Decide How the Buyout Will Be Funded
Paying for a buyout can put stress on the business, especially if it’s not planned for. The agreement should clearly explain how the buyout will be funded. That could mean setting aside money in advance, using life insurance policies, or offering a payment plan that will unfold over time. Having this part figured out early can keep the business from being caught off guard when a transition happens.

Include Triggers for a Buyout
A thorough and well-written agreement will list the specific events that would trigger a buyout. These usually include death, permanent disability, retirement, or voluntary departure. Some agreements also include divorce or bankruptcy, to prevent an ownership share from being divided in a way that could hurt the company. Laying out these events clearly protects everyone involved and keeps the focus on running the business.

Outline the Transfer Process
It’s important to describe how the transfer of ownership will actually take place. The agreement should explain the specific steps, the timeline, and the various responsibilities of each party involved. This helps to avoid confusion and ensures a smoother transition for everyone. Whether the transfer happens over a few weeks or several months, all parties will know what’s expected when it is clearly detailed in writing.

Protect the Business You Built
Establishing and running a propane business takes years of investment and effort. A buy-sell agreement helps to ensure that all that hard work and sweat equity doesn’t fall apart due to lack of planning. By addressing upcoming ownership changes now, you will go a long way in protecting your employees, your customers, and your company’s future. The old saying is very true: “Failing to plan means planning to fail.” By proactively taking steps to outline the transition plan for your company, you set it on a path to continued success rather than letting it fall by the wayside.

A Succession Plan = Success
Strong companies are built on solid foundations. A well-written buy-sell agreement will provide your propane business with the stability it needs to grow, even during times of change. Whether you’re handing over the reins to family or preparing for a sale down the road, this essential document will protect what you’ve built and keep your business moving forward. It will give you control, protect your team, and show your partners and customers that your business is built to last.