Types of Buy-Sell Agreements
Buy-sell planning is crucial component long term business planning. The three main types of buy-sell plans include the stock redemption agreement, the cross purchase buy-sell agreement and the wait-and-see buy-sell agreement.
An agreement between the company and the business owners or partners whereby the owners agree to sell their ownership interest back to the company if they become disabled or wish to retire. If there is a death of an owner, the owner’s estate is required to sell the deceased owner’s interest back to the company.
A written agreement among the company partners or stockholders to purchase each other’s shares at the disability, retirement or death of a business owner.
Wait-and-See Buy-Sell Agreement:
An agreement allowing the business owners to delay the selection of an entity plan or a cross-purchase buy-sell agreement until an actual death, disability, retirement or sale of a business interest.