What Is a Buy-Sell Agreement?

Buy-sell agreements are used when there are multiple owners of a corporation or partnership to determine what happens to the outstanding interest of a business, should one of the owners unexpectantly die or decide to leave.

What Does A Buy-Sell Agreement Do?

Buy-sell agreements are contractual. They make the purchase of the interest mandatory (upon death), they specify what value it will be purchased at, and they guarantee that there is, in fact, a buyer who has the financial means to purchase the interest.

How Does Life Insurance Fit Into Buy-Sell Agreements?

When life insurance is being used in conjunction with a buy-sell agreement, each party purchases a policy on the lives of the other parties in sufficient enough value that if a member did happen to die, every member would have the financial means to purchase the remaining interest in the business left by the deceased owner.

If you’re thinking about implementing a buy-sell agreement as a succession plan for your business, let’s talk. I’m happy to be a productive part of the discussion alongside you and your partners and/or shareholders.

At your service,

Jason F Cunningham