Buy-Sell Agreements

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Insure Your Business Continuation

Protect your business and get peace of mind by setting up a Buy-Sell Agreement. This legally binding contract can be used with all types of businesses. It stipulates that upon the death, retirement, disability or other withdrawal of a principal, his or her share of the business must be sold to the remaining partners/shareholders or the business. Life insurance can help to fund such a transaction.

  • Protect your largest investment: your business
  • Make cash available following the untimely departure of an owner, key employee or large shareholder
  • Set a fair selling price and guarantee a buyer upon an owner’s disability, retirement or death

Buy-Sell Agreement Features

Create liquidity

Upon a business owner’s disability, retirement, or death, his or her family continues to need cash to pay ordinary living expenses as well as potential estate tax liability. Estate taxes are usually due nine months after the date of death. Selling a business under these circumstances can result in the family receiving less than the fair market value.

Set a fair selling price

A business valuation strategy, while all owners are active, remains subject to arm’s length negotiations. Once a business owner has left the business, negotiating a fair sales price becomes more difficult for the owner (or the owner’s estate) because the remaining owners hold most of the cards.

Fix value

A Buy/Sell Agreement ordinarily sets the valuation for estate tax purposes. This allows the owners to plan their estates and reduce the risk of costly valuation disputes among the owners or upon estate tax audit.

Guarantee a buyer

A Buy/Sell Agreement benefits the selling owner’s family by providing a guaranteed buyer(s). The remaining owners are protected against the sale of significant (or, worse yet, majority) interest to an outside investor.


For more information call 1.866.4ML-BUSINESS (465-2874) or e-mail us at AskMLBiz@ml.com.

Merrill Lynch, Pierce, Fenner & Smith Incorporated is a registered broker-dealer, not a bank, and the WCMA account is not a bank account. Banking services are provided by licensed banks or by third parties through arrangements with licensed banks. Unless otherwise indicated, investment products are not FDIC-insured, not guaranteed by a bank and may lose value.

* Additional fees for these services may apply.