A buy-sell agreement is a legal contract restricting the right to dispose of a business interest to specified parties according to specified terms. Typically, this arrangement requires a sale of the business interest, at a formula-determined price, upon one or more of the following triggering events:
- Withdrawal from the business at some earlier time
- In some cases upon attachment of the owner’s property by creditors or in a divorce
These triggering events will vary depending on the needs, desires, and circumstances of the parties.
Reproduced with permission. Copyright The National Underwriter Co. Division of ALM