Accord Financial : Partnership Buyout Agreement

When a company is owned and run by two or more entities, they establish a legal relationship by becoming business partners, sharing in the profits of the business. There are many different types of partnership agreement, and most partnerships will include provisions that spell out partnership buyout agreements. Think of these as corporate prenups. A partnership buyout agreement (sometimes referred to as a buy sell agreement) is important because it sets out clear rules in advance that define whether or not a partner needs to be bought out, the fair market value that must be paid for the departing partner’s interest in the business, what events will trigger buyouts, and even include clauses about who can buy any departing partner’s share in the business.