Sep 21, 2023 / by mamarina / In Allgemein / Leave a comment
A partnership buy-sell agreement is a legal contract that outlines the terms and conditions for buying and selling ownership in a partnership when a partner wishes to leave or pass away. This agreement sets out the procedures for determining the value of a partner’s share in the business and establishing the terms for transferring that share to the remaining partners or to a third party.
A well-crafted partnership buy-sell agreement can help avoid disputes and ensure that the business continues to operate smoothly in the event of a partner’s departure. Here is a sample partnership buy-sell agreement that can serve as a starting point for businesses looking to create their own.
Article 1: Definitions
This section outlines the key terms used throughout the agreement, including “partnership,” “partner,” “buyout price,” and “triggering event.”
Article 2: Triggering Events
This section outlines the events that would trigger the buyout process, such as a partner’s death, disability, retirement, or voluntary departure from the business.
Article 3: Valuation of Partnership Interest
This section outlines the methods that will be used to determine the value of a partner’s share in the business, such as book value, fair market value, or an appraisal by a third-party expert.
Article 4: Sale of Partnership Interest
This section outlines the procedures for selling a partner’s share in the business, including how the buyout price will be paid and the timeline for completing the transaction.
Article 5: Rights and Obligations of Remaining Partners
This section outlines the rights and obligations of the remaining partners when a partner leaves the business, including the right of first refusal to purchase the departing partner’s share.
Article 6: Continuation of Partnership
This section outlines the procedures for continuing the partnership after a partner leaves, including the allocation of profits and losses and the rights and obligations of the remaining partners.
Article 7: Dispute Resolution
This section outlines the procedures for resolving any disputes that may arise in connection with the partnership buy-sell agreement, including mediation and arbitration.
Article 8: Governing Law
This section specifies the governing law that will apply to the agreement and the jurisdiction where any disputes will be resolved.
In conclusion, a partnership buy-sell agreement is an important legal document that can protect the interests of all partners in a business. By defining the procedures for buying and selling ownership in the business in the event of a triggering event, this agreement can help ensure that the business continues to operate smoothly and avoid disputes that can arise when partners leave the business. When crafting this agreement, businesses should consult with an experienced attorney to ensure that their interests are adequately protected.