Buy-Sell Agreement: Definition, Types, and Key Considerations
A —often called a "business prenup"—is a legally binding contract between business owners that dictates how ownership interests are transferred if an owner leaves the business. It ensures business continuity and protects remaining partners from having to work with an inexperienced heir or a creditor of a former partner. Core Components of a Simple Agreement simple buy sell agreement sample
Full names and addresses of all partners/shareholders and the business entity itself. An agreed-upon process for determining the business's worth
An agreed-upon process for determining the business's worth at the time of the event (e.g., Fair Market Value, fixed price, or formula). Fair Market Value
While these documents can be highly customized, standard templates generally include these foundational sections:
Specific circumstances that activate the buyout, typically including:
Events like bankruptcy or divorce that might otherwise force a transfer to a third party.