What Is a Buy-Sell Agreement Called
When starting a new business venture, it`s essential to have a plan in place for any potential changes or events that may arise. One way to do this is by creating a buy-sell agreement, which outlines the process for buying out a partner`s share of the business.
But what is a buy-sell agreement called? There are a few different terms that are commonly used to refer to these types of agreements.
Buy-Sell Agreement
The most straightforward and common term for this type of agreement is simply “buy-sell agreement.” This term accurately describes the purpose of the agreement – to define how the buying and selling of shares in the business will be managed.
Shareholder Agreement
Another term that is sometimes used interchangeably with buy-sell agreement is “shareholder agreement.” This term is often used when the agreement is being created between shareholders in a corporation. The shareholder agreement may include provisions related to buying and selling shares, as well as other aspects of shareholder management.
Buyout Agreement
A buyout agreement is another term that is sometimes used to refer to a buy-sell agreement. This term emphasizes the idea of one partner buying out another partner`s share of the business. A buyout agreement may also include provisions related to how the value of the business will be determined, how payment will be made, and how the remaining partner(s) will manage the business going forward.
Regardless of the term used to refer to this type of agreement, the goals and objectives remain the same. A buy-sell agreement is a critical tool for any business owner or partner, as it helps to manage potential changes to the ownership structure of the business. By outlining the process for buying and selling shares, and determining how the value of the business will be determined, a buy-sell agreement can help to prevent disputes and provide clarity for all parties involved.