10 Reasons Why You Should Have a BSA

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10 Reasons Why You Should Have a BSA 1. To ensure the “what ifs” are discussed and resolved from the outset of a business venture between different entities when goodwill and communication are optimal; 2. To avoid misunderstanding between business principals about their exact obligations and entitlements in the event of the death or incapacity of principal; 3. To ensure a smooth transition of business assets from one generation to the next in the event of death or incapacity of principal of a business; 4. To ensure that minority equity holders are not disadvantaged by the conflicting interests of majority equity holders; 5. Provides a mechanism to ensure that the value of the business is reviewed on a yearly basis for life insurance purposes so that an agreed valuation of the exiting entity’s share of the business is reached thus avoiding deadlocks, delays and disputes in valuation. 6. Provides a certain time frame for funding by instalments, or otherwise as agreed, where the insurance proceeds are insufficient to meet the current market value of the exiting party’s share of the business;

7. Avoids having to wholly or partly sell, or break up, the business in the event that the continuing entity cannot afford to buy out the share of the terminating entity, or a 3 rd party buyer for the terminating entity’s share cannot be found for a good price. 8. In the event of any disputes the BSA provides for dispute resolution and valuation mechanisms by agreed persons / organizations within a pre-determined time frame. 9. The value of the terminating entity’s share is paid direct to the nominated beneficiary of the insured principal or his estate, thus avoiding disputes and delays as to who the beneficiaries should be. 10. Avoids having family of the terminating entity being forced to participate in the business when they may have no desire, or ability, to do so.

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