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ResolutionBuy/Sell Agreements
What are buy/sell agreements?
A buy/sell agreement is an arrangement between owners of a business by which the surviving owners agree to purchase the interest of a withdrawing or deceased owner. A redemption agreement is an arrangement between owners of a business and the entity itself by which the entity agrees to purchase the interest of a withdrawing or deceased owner. A hybrid agreement will contain elements of both a buy/sell agreement and a redemption agreement. The phrase “Buy/Sell Agreement” is used generically to reference to both these agreements.
Why are buy/sell agreements necessary?
There are a multitude of purposes and uses for Buy/Sell Agreements, including:
- (i) imposing restrictions on the transfer of individual interests in a business entity to:
- (A) maintain a balance of control
- (B) prevent participation by third parties who may not be acceptable to incumbent owners
- (ii) to serve as an estate planning too
- (iii) to hedge against internal discord amongst the owners which might otherwise cause irreparable damage to the business or its operations
Of course, countless additional purposes and uses may be identified, but the above constitute the bulk of the reasons for a Buy/Sell Agreement.
Contact Tuesley Hall Konopa for a consultation appointment to learn how buy/sell agreements affect corporate operation and management, protect corporate assets and add confidentiality and non-competition for your business.
