What is a Shareholder Buy-Sell Agreement?
Simply put, a shareholder buy-sell agreement is a binding contract between the shareholders (owners) of the corporation that sets forth (while everyone is getting along and willing to be fair) the terms and conditions of a future sale of their interest in the corporation if a triggering event occurs. A shareholder buy-sell agreement will typically set forth: 1) what events will trigger a buyout (e.g. death, disability, bankruptcy, divorce, retirement, etc.); 2) the price that will be paid for the shareholder’s interest in the business, which may vary depending on the type of triggering event; and 3) who can buy an owner’s interest in the business (e.g. outside third parties, just other shareholders, or just the corporation itself). In the absence of a shareholder buy-sell agreement, each shareholder of a corporation will typically spend tens of thousands of dollars on having their own business valuation prepared and litigating each other in court. What Happens When a Corporation Does N
Related Questions
- If a business enters into a shareholder agreement with GroFin, at what stage can the business purchase the shares that GroFin holds?
- What does American Exchange Corporation do after they receive the Buy-Sell Agreement & Title Commitment from the Closing Agent?
- What is the difference between an operating agreement and a shareholder agreement?
