A buy and sell agreement is a legally binding contract that stipulates how a partner’s share of a business may be reassigned if that partner dies or otherwise leaves the business. Most often, the buy and sell agreement stipulates that the available share be sold to the remaining partners or to the partnership.
The buy and sell agreement is also known as a buy-sell agreement, a buyout agreement, a business will, or a business prenup.
Why buy/sell agreements matter The majority of businesses created in the United States are small businesses. Therefore, many of these companies are not publicly traded and thus create the need for Buy/Sell agreements. Closely-held businesses are formed as LLC’s, Partnerships, or C-Corporation. So, determining the value of a closely held corporation is challenging. Large publicly […]
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