What is a Buy-Sell Agreement?
A buy-sell agreement is a legally binding contract between co-owners of a business. It essentially conducts the affairs if you or your co-owner dies, becomes disabled, retires, is forced to leave the business or chooses to do so. The agreement requires that if one of the business owners is no longer a part of the business, that their share is sold to either the business or the remaining owners. If a co-owner is no longer a part of the business, you can use the funds from the buy-sell agreement to buy out your co-owner’s share in the business. A buy-sell agreement is a good idea for any type of business, no matter how small. It can solve any confusion in the event of a co-owner’s death. A buy-sell agreement’s benefit greatly outweighs the cost.