Keeping control of the business within the family is usually an important desire of family members. The death of a family member or someone's desire to leave the business may jeopardize family control of the business unless careful steps are taken. In a cross-purchase agreement, all the shareholders agree that one or more of the other owners will purchase the departing shareholder's interest in the company. Under a redemption agreement, the company itself buys back the shares. Or a hybrid approach can be used, where some shares are purchased by the company, and the rest by the remaining shareholders.
Some jurisdictions restrict the ability of corporations to purchase their own shares.
It's important to have your advisors to check the specific statutes in your area. Value the Business Carefully Placing an appropriate value on a family business is important. An understated valuation may cause hardships to a deceased shareholder's estate, while an overstated valuation may make it difficult to keep the business within the family. Family businesses are often closely held, making determining the actual market value difficult. The book value of a company and its assets is often easier to calculate.