A Buy-Sell agreement defines how an owner’s interest is to be distributed if he or she dies, or becomes permanently disabled. It helps ensure that a business or professional practice can continue after death or disability of one of the owners or partners. It does this by requiring each owner or partner to sell his or her interest to the remaining owners – or to the business entity itself – under terms defined in the agreement. It equally obligates the remaining owners or the business entity to purchase the deceased or disabled owners interest, and stipulates the formula by which the price will be determined. It is negotiated – in advance of the event – by a mutual agreement among the owners or partners.
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