An agreement among business owners is frequently referred to as a “Buy-sell Agreement” whether the owners operate a limited liability company or a corporation. A Buy-sell Agreement is like a pre-nuptial agreement among the owners of a business. As with a couple that is about to get married, it protects the business owners from certain triggering events and sets forth the manner in which those triggering events will be handled. Such triggering events include the death or disability of an owner, termination of an owner’s employment or withdrawal of an owner from the entity.
Business relationships among owners change over time and it is important that these and other triggering events are discussed, negotiated and agreed upon at the beginning of the relationship to protect both the owners, as well as the business, from costly and time consuming litigation should any disputes or differences arise between the owners during the course of the relationship.