In the excitement of planning and running your business, it is easy to forget about one of the most crucial components of ensuring its survival: what happens when a partner passes away or simply wants out? A buy-sell agreement is a key part of a smooth ownership transition.

A buy-sell agreement does three key things:

1. It provides a way for shares to be valued when a partner retires or dies.
2. It ensures that the shares are sold to a buyer approved by the remaining partners.
3. It can address the procedure for selling the business outright.

Think of it as a contract between the current and future owners of your business and as extra insurance that your legacy will continue after your death.  Depending on the needs of your business, a buy-sell agreement can be created to utilize a variety of payment options for the selling shareholder or estate.

Be sure to plan ahead and hire an experienced business attorney to write the buy-sell agreement long before you need it. He or she will help you consider all possible scenarios for selling all or part of your business and draft an agreement that fits your unique needs.

It is easier to discuss and agree upon details when the sale of your business is an abstract concept rather than in the line of fire. Many pre-formulated agreements only provide for ownership transfers upon divorce, death or disability, but a proper buy-sell agreement should look at your situation individually and develop triggering points that go well beyond the obvious.