Buy-Sell Agreement
What is it?
A Buy-Sell agreement is a legally binding contract between co-owners of a business that outlines the reassignment of a partners shares of the business in the event of a death, or otherwise leaves the business. The agreement can prevent costly battles for control with surviving children, spouses, or having to go through probate court.
Types of Buy-Sell agreements
- Cross Purchase - The remaining partners will purchase the shares of the business
- Entity Purchase = The business purchases the departing partners shares of the business
Benefits
- Prevents shares of the business to be sold to an unsuitable third party
- Ensures that the existing partners can afford the buyout of the departed owners shares
- Prevents a break in management & voting control of the business
- Sheilds your business from squabbling relatives, business associates, and spouses