A business buy-sell agreement, also known as a buyout agreement or business continuation agreement, establishes the terms and steps that will transpire in the event that a partner leaves the company. Like all business contracts, buy-sell agreements should be written clearly and provide explicit guidelines in order to minimize the potential of legal disputes arising in the future. Business owners are highly encouraged to put a buy-sell agreement in place at the inception of the business or soon thereafter. The more protections you enact now, the more you can reduce the likelihood of heated legal disputes later on.
Drafting Business Buy-Sell Agreements
It may be helpful to think of a buy-sell agreement as a will for your business, as you are preparing for a future where a partner leaves the business. Most business buy-sell agreements should include three key components that address:
If no buy-sell agreement is in place, all of these elements can be fiercely contested when a partner leaves the business. It’s wise to negotiate these terms and commit them to a legally binding contract long before such provisions are needed.
While putting a buy-sell agreement in place is essential for any North Carolina business, reviewing this contract regularly is highly recommended. The needs of your business may change over time, and it’s important to modify your buy-sell agreement to reflect any fluctuations. At Hinson Faulk, P.A., we enjoy building long-term relationships with our business clients so that we can develop a deep understanding of your specific needs. Together, we’ll make sure your business remains protected and prepared for what the future may bring.