What is a buy-sell agreement?

A buy-sell agreement, sometimes called a buyout agreement, is a legal contract in California business formation law that outlines the circumstances under which a business owner’s interest in a business may be sold or transferred. This agreement is typically created when a business is first formed and typically requires the consent of all owners. It helps prevent conflicts between owners and helps to protect the business. The agreement usually states what events will trigger the sale or transfer of ownership interests. These triggers can include death, retirement, disability, or voluntary sale. Some agreements may also allow for the forced sale of an owner’s interest in the event of a disagreement between the owners. The agreement also usually outlines how the sale or transfer will be conducted. This can include the details of how the price of the ownership interest will be determined, the timing of the sale, and the payment terms. This ensures the transaction will be handled fairly for all involved. Buy-sell agreements are an important part of business formation law in California, and help protect the value of a business and the interests of its owners. It is important for business owners to understand their rights and obligations under a buy-sell agreement.

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