What is a buy-sell agreement?

A buy-sell agreement is a legally binding contract between business owners that is used to protect the owners’ interests. It is designed to dictate what will happen if one of the owners decides to leave the business, dies, suffers a disability, or other changes occur that would affect the business. In the state of Texas, a buy-sell agreement must be written in accordance with the laws of the state. The agreement may be requested by one or both parties to the agreement, or it can be put in place at the time the business is established. The terms of a buy-sell agreement should be tailored to fit a given business’s specific needs. The agreement should include important details, such as what happens if an owner decides to leave the business, how the remaining owner will buy out the one who is leaving, and who will be responsible for the payment of any additional taxes that arise from the transfer of ownership. The agreement may also lay out in detail how disputes between the owners will be resolved and other rights or restrictions between the owners. It is important to note that all parties to the agreement should always be given the opportunity to review and comment on the terms of the agreement before it is finalized. By having a strong buy-sell agreement in place, business owners can protect their interests and ensure that the business has a proper succession plan in the event of changes or disputes that may arise.

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What is a buy-sell agreement?

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