A buy-sell agreement sets conditions on a company owner’s ability to sell their interest in the company and on who can buy their interest. Now if you own a company, you may be wondering why you would want to restrict your ability to sell your interest. For starters, a buy-sell agreement can set conditions for events in which your interest is being transferred out of your control, for example divorce and death.

A buy-sell agreement also protects owners and investors in closely held companies. If you start a business with your long-time business partner, Bob, you want to work specifically with Bob and not whoever Bob can sell his interest to. Buy-sell agreements are also very helpful if you give employees any interest in the company such as through an employee stock option program. Buy-sell agreements can require that the employee sells their stock back to the company or an owner of the company. Conditions can also vary depending on whether the employee retires, leaves the company voluntarily, or is terminated involuntarily.

Lastly, buy-sell agreements are very important if there are restrictions on who can have an interest in your company, such as some professional companies like law firms. Part 2 will go more in depth on the various arrangements and conditions your buy-sell agreement may have.

To get started on your buy-sell agreement or to review one that you currently have, contact one of our business attorneys in our Sioux City, Sioux Falls, or Omaha locations.


Subscribe Our Blog

Posts by Topic

DISCLAIMER: The information in this blog post (“post”) is provided for general informational purposes only, and may not reflect the current law in your jurisdiction. By visiting this website, blog, or post you understand that there is no attorney client relationship between you and the Goosmann Law Firm attorneys and website publisher. No information contained in this post should be construed as legal advice from Goosmann Law Firm, PLC, or the individual author, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this Post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.