Startup Terms Glossary
What a Buy-Sell Agreement?
Buy-sell agreements, also known as buyout agreements, allow business partners to handle ownership transfers if one partner leaves the company. These provisions can include involuntary or voluntary departures. Startups should have a buy-sell agreement in place if something happens to a partner, including disagreements, death, permanent disability, and divorce.
Buy-Sell Agreement Examples
Examples of startups using buy-sell agreements include:
- Example 1. Selling the business after a partner’s death
- Example 2. Transferring the business to another person upon court order
- Example 3. Protecting operators in case of permanent disability
- Example 4. Not reaching agreements between partners leading to a company sale
- Example 5. Safeguarding investments during the divorce of a partner from his or her spouse
Here is an article that goes further into Buy-Sell Agreements.
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