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What Are Buy-Sell Agreements?

Posted by Dairel Denton Posted on June 12 2017

A buy-sell agreement is sometimes known as a buyout agreement.  It is a legal document that binds co-owners of a business on how to handle the situation if one owner dies, is forced to leave the business or chooses to leave the business.

Think of it as a prenuptial agreement between business owners.  The contents and arrangements are agreed upon by the owners if something should happen.  Some buy-sell agreements are funded by insurance policies in case of death of an owner. 

Buy-Sell Agreements contain the co-owners involved in the agreement, what specific events will trigger a buyout, the price to be paid, the date the owners came into agreement, and signatures.  There are more considerations that need to be made and it’s important to discuss those with your attorney and your accountant.