Buy-Sell Agreement
A buy-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.
The buy-sell agreement stipulates that the business share be sold to the company or the remaining members of the business according to a predetermined formula. Buy-sell agreements are commonly used by sole proprietorships, partnerships, and closed corporations in an attempt to smooth transitions in ownership when each partner dies, retires, or decides to exit the business.
