A buy-sell agreement is a legally binding contract between business partners that outlines what happens to an owner’s interest in the business if certain events occur. These events often include death, long-term disability, voluntary departure, or disputes. The agreement ensures that the remaining partners can purchase the exiting partner’s share, providing clarity and stability for the business.

A buy-sell agreement can be structured as part of a broader partnership or shareholder agreement, or it can exist as a standalone document. This suite provides standalone agreements that can be used in conjunction with a partnership, company, or unit trust.

The primary purpose of a buy-sell agreement is to manage ownership transitions smoothly, protect the business and its owners, and reduce the risk of financial or legal conflicts. By setting out clear terms in advance, it safeguards the business’s continuity and helps maintain trust among owners. For businesses with multiple owners, having a buy-sell agreement in place is highly recommended to ensure stability, seamless transitions, and long-term success.

Buy Sell Agreement (Australia)

About This Agreement

A Buy Sell Agreement is a business succession contract used when one or more owners exit due to death, disability, retirement, or another triggering event. It grants the remaining proprietors the right to buy the departing owner’s share, while requiring the departing proprietor or their estate to sell.

The agreement provides certainty around valuation, funding, and payment, ensuring a smooth transfer of ownership and protection for all parties involved.

Key Features

• Definitions of “Buy Option”, “Sell Option”, “Option Event”, “Market Value”, “Funding Agreement”, and “Terminating Proprietor”

• Mutual buy and sell options granted between proprietors

• Option notices and procedures for exercising rights

• Valuation procedure for determining the market value of a departing proprietor’s share

• Payment provisions tied to funding agreements and insurance proceeds

• Rules for transfer of ownership and delivery of transfer instruments

• Restrictions on dealing with, charging, or encumbering shares without consent

• Termination rights for breach or mutual agreement

• General provisions covering notices, severability, entire agreement, stamp duty, and governing law

• Schedules setting out parties’ shares, related agreements, and sample option notices