“A buy-sell agreement is a foundational document typically established when an LLC is formed or shortly thereafter. Created with precise legal language, it ensures that both departing and remaining members are treated fairly.” KPPB LAW
Outlining how the remaining owners or business will pay for the buyout. Common Agreement Structures
Explicitly naming all stakeholders and their current equity percentages. buy sell agreement for small business
Owners agree on a set dollar amount. It is simple but risky because it quickly becomes outdated if not updated annually.
A clear formula or process to determine the price of the interest being sold. “A buy-sell agreement is a foundational document typically
The most popular method; it provides immediate liquidity when a partner dies or becomes incapacitated.
Uses financial metrics like a multiple of EBITDA or revenue. It provides objectivity but may fail to capture intangible assets like goodwill. Owners agree on a set dollar amount
Determining a fair price is often the most sensitive part of the agreement: