Buy-Sell agreements are legally binding contracts that stipulate how a partner’s share of a business can be reassigned if that partner:
gets a divorce
departs the company
otherwise leaves the company.
Often, the buy-sell agreement will stipulate that the available share(s) be sold to the remaining partners.
Sometimes a buy-sell agreement has also been known as a buyout agreement, a business prenup, or business will.
A buy-sell agreement must be funded and be evaluated every few years to ensure proper funding is in place.
Buy-sell agreements are commonly used by sole proprietorships, partnerships, and closed corporations.