Explanation Buy-Sell Agreement

A purchase-sale contract, also known as a buy-back contract, is a legally binding agreement between co-owners of a business that regulates the situation when a co-owner dies or is otherwise forced to leave the business or decides to leave the business. [1] Bankruptcy. Most buy-sells prepare for an owner`s bankruptcy by requiring the remaining owners and the business to have the opportunity to buy out the bankrupt owner`s interests rather than being forced to tolerate a receiver as the new owner of the business. Ensuring that the terms of the purchase-sale agreement are written down and that owners agree to these terms before a triggering event occurs helps eliminate potential conflicts in the future. .