Buy Sell Agreement

A Buy-Sell Agreement (also called a buyout agreement) is essential for any multi-owner business. It establishes what happens when an owner wants to leave, dies, becomes disabled, divorces, or faces bankruptcy. Without one, surviving owners may be forced into unwanted partnerships with heirs, ex-spouses, or creditors. This agreement provides an orderly exit process and protects business continuity.

The template covers all critical triggering events and procedures: death of an owner, permanent disability, retirement, voluntary departure, divorce, bankruptcy, termination for cause, and change of control restrictions. For each trigger, it defines whether purchase is mandatory or optional, who can buy (remaining owners, the company, or both), and the timeline for closing.

The valuation section is crucial—it establishes how the business will be valued when a buyout occurs. Common methods include fixed price (updated annually), formula-based (multiple of earnings), independent appraisal, or book value. The agreement also addresses funding through life insurance, installment payments, or reserves.