Family members who enter into a private business together are taking on double risk. They face the same types of challenges that all owners and investors face in operating/investing in a business, but they are also exposed to the risk their personal relationships may suffer if the company does not fare well. For this reason, the decision to adopt a buy-sell agreement (BSA) – a type of corporate prenup – may be even more important for owners of family businesses. The BSA provides a clearly defined path governing how a partner exit will take place when the co-owners are in conflict about their roles in the business or the direction of the company.
