To prevent an uncomfortable and embarrassing separation, the owners should agree on how to separate before joining together. Very similar to a prenuptial in marriage, a ‘Cross Purchase Agreement’ identifies the various business issues to address such as valuation of the ownership position, the respective form of purchasing the departing ownership and time period of payout.
A methodical process of determining the overall net value of a business. Generally performed by a CPA. The preparer follows a promulgated set of standards to determine the overall value of a small business. The final document is customarily used as a basis of determining a buy-out or buy-in for owners of small business.