Business Buy-Sell Agreement

An agreement established between business partners in whom each agrees to sell their share to the other in event of death, disability or departure.

A business buy sell agreement between owners of a business determining the control of the corporation upon the death or disability of one of the owners provides a mechanism for continuing control of the business by surviving owners. The buyout price can be fixed or periodically revised, and may be a fixed-dollar amount or dependent on agreed upon variables.

The business buy sell agreement may also have different prices and methods of payment in relation to the event triggering the agreement. The buy sell agreement identifies who is obligated or entitled to make the purchase and allocates purchase obligation on an established basis, such as: percentage of business interest; seniority; or capital contribution.

The sale is executed by one of three methods: cross-purchase, entailing purchase by the individual owners; entity redemption, entailing purchase by the business corporation; or mixed agreement.

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