How to Define a Buy-Sell Agreement

Video Transcript

"A buy-sell agreement is an agreement that is designed to handle situations when one owner or one or more owners wants to sell their interest in the business. A buy-sell agreement is also a way to prevent one owner from selling his or her interest without the other owners knowing about the sale. This way all owners consent to the sale before another agrees. Buy-sell agreements are often set up to control trigger events such as divorce or bankruptcy, debt, disability or even retirement. There are usually four types of buy-sell agreements. A cost purchase agreement, a entity purchase agreement, a hybrid agreement and lastly a third party agreement. Buy-sell agreements are also known as business continuation agreements, stock purchase agreements and buy out agreements. A buy-sell agreements must be carefully considered before enacting and consultation with an attorney is definitely advised."