What is a buy-sell agreement?

A buy-sell agreement (also known as a buyout agreement) is an agreement among the owners of a business that outlines the conditions under which a business owner’s shares of ownership can be sold or transferred. Buy-sell agreements are common in Connecticut and are regulated by the state’s Business Formation Law. A buy-sell agreement sets forth the terms and conditions for the sale of ownership interests in a business. This agreement should establish the purchase price of an owner’s shares and determine who is eligible to purchase the shares. Additionally, the agreement will detail how the sale will be funded (for example, cash, loan, etc.) and who will have the right of first refusal to purchase the shares. When an owner decides to exit the business, the buy-sell agreement will outline how the sale will proceed. The purchase price agreed upon in the agreement will be used to determine how much the selling owner will receive for their shares. This is important to ensure that the seller is fairly compensated for their shares. In Connecticut, buy-sell agreements must adhere to the provisions of the Business Formation Law. It is important for business owners to understand the requirements outlined in this law and ensure that their buy-sell agreement is compliant with the law. This will help ensure that the sale of shares is handled in a legal manner and that the rights of owners are fairly protected.

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What is a buy-sell agreement?

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