Examples of Buyout Agreements
1. Entity-Purchase Agreement: In this scenario, the business entity itself agrees to purchase the departing partner’s shares. The remaining partners typically buy the shares in proportion to their existing ownership percentages.
2. Cross-Purchase Agreement: Here, individual partners within the business agree to buy the departing partner’s shares directly from them. Each remaining partner has the option to purchase a portion of the leaving partner’s shares, maintaining their respective ownership stakes.
3. Wait-and-See Agreement: This type of agreement allows the partners to wait until a triggering event, such as a partner’s retirement or death, occurs before determining who will purchase the departing partner’s shares. It provides flexibility in planning and executing the buyout.
4. Divorce Settlement Agreement: In cases where business interests are involved in a divorce, a buyout agreement can specify how one spouse can buy out the other’s share of the business to facilitate the division of assets.
5. Incapacity Provision: Buyout agreements can also include provisions for situations where a partner becomes temporarily or permanently incapacitated, outlining the process for buying out their shares to ensure the business continues to operate smoothly under such circumstances.