Why You Need a Buy-Sell Agreement

Most business partnerships start with the best intentions, but not every partnership ends that way. That's why buy-sell agreements are so important. A buy-sell agreement is a contract between business

partners that dictates who can buy a departing partner’s share of the business and establishes a fair price for the partner's stake. The agreement also describes how to determine a company's value if all the owners decide to sell.

Partner Buyout
A typical buy-sell agreement covers a potential sale or buyback situation when a partner leaves a business. The agreement may specify to whom a departing partner can sell (usually they must sell to someone else in the business), and it also sets a fair price for their share of the business. This protects the remaining partners by guaranteeing that the departing partner will sell their share to a suitable owner, and it protects departing partners by assuring them a fair price for their shares of the business.