Buy-Sell Agreements: What They Are and Why You Need One

If you own a business with a partner—or even a close family member—you need more than verbal agreements and good intentions. You need a buy-sell agreement: a formal plan for what happens if one of you leaves, retires, passes away, or decides to sell.

At MCAC, we’ve seen how buy-sell agreements protect business continuity and prevent disputes. Here’s what they are and why every co-owned business should have one.

1️⃣ What Is a Buy-Sell Agreement?

It’s a legally binding contract that outlines how a partner’s share of a business will be handled if certain triggering events occur—like death, disability, retirement, or voluntary exit.

2️⃣ It Sets Clear Terms for Valuation

One of the most common points of conflict in a transition is how the business is valued. A buy-sell agreement sets the valuation method in advance to avoid disputes or unfair offers.

3️⃣ It Prevents Ownership Disputes

Without a clear plan, ownership could transfer to heirs, creditors, or outside parties. A buy-sell agreement ensures ownership stays within the intended structure of the business.

4️⃣ It Helps Secure Financing or Insurance

Many businesses pair their buy-sell with insurance policies to fund a buyout. This ensures there’s cash on hand when one party exits, easing the burden on remaining owners.

5️⃣ It Brings Peace of Mind—Now and Later

Like estate planning, buy-sell agreements aren’t just about worst-case scenarios—they’re about protecting the value of your hard work and ensuring fair treatment for everyone involved.

A buy-sell agreement is one of the most important documents a co-owned business can create. It protects relationships, assets, and the future of the company.

📞 Need help drafting or reviewing a buy-sell agreement? MCAC is here to support you every step of the way.