Contingency Agreement Types: Protect What Matters Most

Secure Continuity, No Matter What.

Overview

Contingency planning at SRG is a proactive service designed for business owners who want to (and should want to) protect their firm and clients in the event of a triggering event (e.g., death, disability, or incapacity). These services help ensure business continuity by creating a customized transition or sale plan that outlines what will happen and who will take over.

At Succession Resource Group, our team helps you choose the key features and details of a contingency plan to create a realistic and achievable contingency plan for your team, clients, and family, as well as the most appropriate type of agreement to achieve your unique goals. This article explains what contingency agreements you might consider implementing.

Most Common Agreement Types

Buy-Sell Agreement (One Way)

Nature: A contractual obligation to purchase / sell upon a triggering event (e.g., death, disability, or incapacity). The contingency agreement itself does not represent the purchase / sale documentation; however, it defines who, when, at what price, and what terms the purchase will occur.

Purpose: Ensures commitment and prioritization without finalizing a sale.

Best For: Business owners who want a transition plan to protect their clients and business value with minimal disruption, and who have a willing buyer to name in such an agreement.

Reciprocal Buy-Sell Agreement

Nature: A mutual agreement where two firms (or individuals) agree to buy each other’s business if a triggering event (e.g., death, disability, or incapacity) occurs in either.

Purpose: Provides peace of mind and shared protection between similarly situated firms. Reciprocal buy-sell agreements ensure commitment and prioritization without finalizing a sale.

Best For: Business owners who have a mutual agreement to the terms of a transition plan to protect their clients and business value with minimal disruption.

Retainer Agreement

Nature: A service arrangement between the business owner(s) and Succession Resource Group (SRG), where SRG is contractually obligated to find a suitable buyer in the event of a triggering event (e.g., death, disability, or incapacity) to purchase your business.

Purpose: Provides peace of mind to business owners who don’t have a contingency partner identified, but want to ensure their clients and business will be protected with minimal disruption.

Best For: Business owners who want a backup plan with minimal disruption but don’t have a willing buyer to name in such a plan.

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Copyright

This resource provided by Succession Resource Group, Inc. (“Provider”) is intended solely for informational purposes and general guidance on a variety of situations and may not be suitable for all advisors. This resource is provided “AS IS” and “AS AVAILABLE,” without warranty of any kind, express or implied, and should not be relied upon as legal, tax, financial, investment, or other professional advice. This resource cannot and does not account for the unique circumstances of each specific situation and must be reviewed by your own independent attorney, CPA, and other relevant professional advisors prior to beginning any due diligence process or taking any action in reliance on this resource. You acknowledge that no attorney-client relationship is created through the provision or use of this resource. Succession Resource Group, Inc. makes no claims, promises, representations, or guarantees whatsoever, whether express or implied, regarding the accuracy, completeness, timeliness, reliability, suitability, adequacy, or fitness for any particular purpose of the information contained herein, and expressly disclaims all such warranties to the maximum extent permitted by applicable law. Nothing in this resource should be construed as a recommendation. By utilizing these materials, you: (i) assume full responsibility for any loss, damage, liability, cost, or expense (including reasonable attorneys’ fees and costs) resulting from or in any way connected to the use of, or inability to use, this resource; and (ii) release, defend, indemnify and hold harmless Succession Resource Group, Inc., its affiliates, officers, directors, employees, authors, contributors, agents, licensees, successors, and assigns from any and all known or unknown claims, demands, damages, losses, liabilities, costs, or causes of action that may arise, at any time, out of or relating to your use of or reliance upon this resource.