buy-sell agreement


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buy-sell agreement

n. a contract among the owners of a business which provides terms for their purchase of a withdrawing partner's or stockholder's interest in the enterprise.

References in periodicals archive ?
Whether purchasing a key person policy, COLI, or an insured buy-sell agreement, or all of the above, companies like New York Life Insurance and Allstate offer trained personnel and resources statewide in Alaska to assist in business planning.
But a formula approach is unlikely to enable the buy-sell agreement to both facilitate estate planning and provide liquidity at a fair market value during the owners' lifetimes.
Johnson Security's other attorney, notes that a buy-sell agreement should have some provision for an accurate valuation of the business interest that will be bought or sold.
Parrish: Agreeing on the value of the business is one thing, but reflecting it in the actual buy-sell agreement adds a layer of complexity.
Another potential issue with respect to insurance-funded buy-sell agreements arises from the requirement that, in order to satisfy the notice and consent requirements, the employee must be notified in writing of the maximum face amount for which the employee could be insured at the time the EOLI policy was issued.
But, if the buy-sell agreement had been set up so that the surviving owners personally purchased the stock from the deceased shareholder's estate (rather then using the corporation to buy the stock), the survivors would get a "step up" in tax basis in the purchased stock.
To work as intended, buy-sell agreements must specify the value of the company's stock and a way to pay for the shares.
A properly drafted buy-sell agreement will have the flexibility of being either a cross purchase or a redemption agreement at the discretion of the company and the partners after considering the circumstances surrounding the triggering event.
Similar buy-sell agreements may be entered into by members in LLCs engaged in other types of businesses, to provide a market for a deceased member's interest or ensure the remaining members can purchase a deceased member's interest for a price agreed on by the members at some earlier point.
4) The franchisee submits the buy-sell agreement and other required information about the buyer to the franchisor.
Just as with other closely held businesses, buy-sell agreements are a good idea in a family owned business, says Waterman.