{"id":4853,"date":"2016-04-04T10:47:45","date_gmt":"2016-04-04T15:47:45","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/smallbusiness\/incorporation-and-legal-structures\/partnership-change-plan-ahead-with-a-buy-sell-agreement.html"},"modified":"2025-10-29T23:38:00","modified_gmt":"2025-10-30T04:38:00","slug":"partnership-change-plan-ahead-with-a-buy-sell-agreement","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/incorporation-and-legal-structures\/partnership-change-plan-ahead-with-a-buy-sell-agreement.html","title":{"rendered":"Partnership Change: How To Plan Ahead With a Buy-Sell Agreement"},"content":{"rendered":"\n
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Partnership Change: How To Plan Ahead With a Buy-Sell Agreement<\/h1>\n\n
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\n By Jade Yeban, Esq.<\/a> | Legally reviewed by Catherine Hodder, Esq.<\/a>\n | Last updated\n
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Editorial Note: We earn a commission from affiliate partner links on FindLaw. Commissions do not affect the editorial integrity of our legal content.<\/p>\n\n <\/div>\n \n

\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n

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Key Takeaways<\/h2>\n

A buy-sell agreement<\/span> is a contract between business partners<\/span> that controls what happens when a partner leaves the company. This agreement outlines the triggering events<\/span>, such as death, disability, or retirement, that allows or requires a buyout<\/span>.<\/p>\n\n <\/div>\n <\/div>\n<\/div>\n\n\n

When people start a business interest<\/span> as partners, it is called a partnership. Sometimes, though, someone might want to leave the partnership or be unable to continue forward with the partnership. This is where a buy-sell agreement<\/span> comes into play.<\/p>\n

A buy-sell agreement<\/span> allows you and your partners to plan ahead for bumpy roads when a partner leaves the business. This is a very important legal document that all business partners<\/span> agree to. It helps everyone know what will happen if a partner needs to share their share of the business, also known as an owner\u2019s interest<\/span>.<\/p>\n

This article addresses how your small business<\/span> can plan for partnership change through drafting a\u00a0buy-sell agreement<\/span><\/a>.<\/p>\n

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What Is a Buy-Sell Agreement<\/span>?<\/h2>\n

A buy-sell agreement<\/span> is like a business continuity<\/span> plan for your company. It\u2019s sometimes called a business buyout<\/span> agreement<\/span> or a partnership buyout<\/span> agreement<\/span>. In general, a buy-sell agreement<\/span> is a\u00a0contract<\/a>\u00a0between all the partners in a business that deals with the future ownership of the business and partnership change.\u00a0<\/p>\n

This agreement is a promise between co-owners of the business about how an owner\u2019s interest<\/span> in the business can be bought and sold. Everyone agrees on the purchase price<\/span> and how to handle the change if someone leaves the company.<\/p>\n

What Is in a Partnership Agreement?<\/h2>\n

Because a buyout<\/span> agreement<\/span> is a binding contract<\/span>, it can either stand by itself, or it can be included in the\u00a0partnership agreement<\/a>. It should generally cover important business decisions, such as:<\/p>\n