Why You Should have a Buy-Sell Agreement

Why You Should have a Buy-Sell Agreement

Contrary to what many people may believe, a buy-sell agreement does not govern a transaction in which one company buys another company. Instead, this agreement is between the co-owners of the same business, and it serves a very specific purpose to help maintain ownership interests in the company. Specifically, these agreements dictate when owners have the right to purchase another owner’s interest before it goes to another party. Buy-sell agreements can come into play in numerous situations when one owner’s interests may be in jeopardy. Such situations include: An owner needs to file for bankruptcy An owner wants to retire An owner passes away An owner gets divorced The following is one example when a buy-sell agreement might come into play. A company has four owners and one of them…
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