Buy-Sell and Other Owner Agreements

Frequently, owners of a business have a shared interest or history which allowed the idea of a new company to take hold.  Each of the owners usually brings complimentary capabilities to support the success of the new business.  These can range from contacts with users or purveyors of the goods and services, organizational abilities, specialized knowledge, patents or financing.  Sometimes, but not always, it is contemplated, and expected, that the owners will take an active role in managing and working for the business.

In those situations where the owners expect that either they will all actively work in the company (or have other duties) or where there is a general desire to limit ownership in the company, an agreement both restricting the transfer of the ownership interests (corporate stock or membership interests) and offering owners to purchase those ownership interests upon the occurrence of certain triggers, is entered into at the time of or shortly after the formation of the company.  These triggers which give rise to a purchase option and generally an offer to sell to a non-owner, customarily include death, disability, withdrawal or termination from employment and retirement.

In addition to providing a means to restrict ownership, such an agreement can provide liquidity.  In many Buy-Sell Agreements, a formula or agreed upon valuation (adjusted periodically) is established, thus removing an issue which can be contentious after a triggering event.

Buy-Sell and Owner Agreements can be, and by virtue of their subject matter are, frequently complicated documents.  Consulting with the experienced attorneys of Weiss & Associates, P.C. will assist in determining your objectives and the means to achieve those objectives.