Business Law

Buy-Sell Agreements

Life brings about a series of unanticipated events and any business partnership should be protected from what might happen when an owner retires, gets divorced, goes bankrupt, becomes disabled, or passes away. Every co-owned business needs a buy-sell agreement when the business is formed. Basically a buy-sell agreement reduces conflict when the time for a buyout arises.

A properly structured and funded buy-sell agreement can ensure the smooth transition and continuation of your business. It can help to avoid conflicts and power struggles among partners/owners when a co-owner wants to leave the company and it also protects the owner who is remaining in business. Agreeing on a way to value the company in advance gives the owners a chance to discuss and vote on how a reasonable price for the company should be calculated.

Clauses in a Buy-Sell Agreement

A buy–sell agreement consists of several legally binding clauses. These agreements tend to guide buyouts between the owners themselves, so they are also referred to as buyout agreements. Following are some of the key business decisions buy-sell agreements control:

  • Who can buy a departing share of the business? The decision may include outsiders or be limited to other partners.
  • When can owners sell their interest? The most common events that trigger buyouts are death, disability, retirement, or an owner’s decision to leave the business.
  • What price will be paid for a partner’s or shareholder’s interest?

Help from an Experienced East Bay Buy-Sell Agreement Attorney

You may find it difficult to deal with these questions and the myriad of decisions that will follow, yet an East Bay business lawyer at the Law Office of Thomas C. Tagliarini experienced in buy-sell agreements can help you choose the right type and draft it.

Types of Buy-Sell Agreements

The types of buy-sell agreements vary. Following are the most common agreements that we handle at the Law Office of Thomas C. Tagliarini:

  • Entity buy-sell agreement: requires the company itself agree to purchase a deceased partner’s share of the business.
  • Cross-purchase buy-sell agreement: a transaction between all shareholders but does not involve the business itself. Usually, the purchase of the shares is financed by the life insurance that was held on the deceased shareholder.
  • Wait and see buy-sell agreement:  an agreement that requires both the company and the business owners agree in advance to purchase the remaining business interest of the departing shareholder. The price of each share is usually predetermined.
  • Disability buy-sell agreement: stipulates that shareholders must agree to purchase the shares of any shareholder who becomes disabled.

Free Initial Consultation

Contact the Law Office of Thomas C. Tagliarini by phone at (510) 444-0692 or email for a free consultation with an East Bay will dispute lawyer. We serve Oakland, San Francisco and the surrounding counties of Alameda, Contra Costa, San Mateo, Santa Clara, and Marin.