a buy-sell agreement or buyout agreement governs the situation where one partner leaves the business. if you do decide to implement a buy-sell agreement, here are a few of the decisions you and your partners will need to make. you will need to define when the agreement is triggered. a mandatory buy-sell agreement will require the business or your partners to purchase your share; an optional buy-sell agreement will commonly give a ‘right of first refusal’ to your partners, the business or third-parties (such as surviving spouses to by the shares). a buy-sell agreement will obligate your partners to buy your stake (cross-purchase agreement),  the business itself (redemption agreement) or a hybrid.

for a small business, partnership change — especially a partner leaving the business or even dying — could occur at some point. a buy sell agreement (also called a buyout agreement) allows you and your partners to plan ahead for bumpy roads when a partner leaves the business. there are always some partnerships that neglect to take on the simple yet necessary task of forming a buy sell agreement that will deal with changes in the partnership. by creating a buyout agreement with your partners, you will be prepared if one partner suddenly dies, wants to leave the business, or gets divorced. generally speaking, a buy sell agreement (or a buyout agreement) is a contract between all the partners in a business that deals with the future ownership of the business and partnership change. it should generally cover important business decisions, such as: as some commentators have put it, another way to think of a buyout agreement is like a prenuptial agreement for businesses.