These agreements are often compared to marital agreements for companies. They determine what happens to the ownership of the business if one of the owners (or owners) experiences life changes that could affect the continuity of the business itself. Life changes can range from divorce or bankruptcy to death. The purchase-sale contract protects the remaining business and owners from any impact on an owner`s privacy that may influence the business. The repurchase agreement defines the types of events that trigger the contract. Each agreement is developed to best meet the needs of each company. It may contain specifications on who can buy shares and what type of life situation would trigger a buyout. It could also indicate how the purchase is financed. What happens when an owner dies and a beneficiary inherits his share of the business? What happens when an owner divorces and an ex-spouse receives part of the activity? What if a person dies and his executor had to sell his share of the company to cover his debts? Do the other owners have the first option to purchase? If an owner files for bankruptcy, how many layoffs do they have to give? Calculating the fair value of your LLC is one of the most important steps in establishing a sale-to-purchase contract. The agreement is not applicable unless it contains a purchase price that can be deducted by several methods. If you do not have a repurchase agreement in any of the above circumstances, your company could be subject to a partition per sale. This means that a court can order the dismantling and sale of business items to ensure the financial value to which a new owner is entitled.

On the other hand, a court could decide to grant ownership to a new person in one of the above circumstances, which would give that new person the same decision-making capacity as the existing partners. Life insurance is a common way for many companies to plan the execution of the sales contract. For example, for many co-owners, the market value of the business would be estimated. Each partner would then be insured by the other owners or the company for its share of the total value of the business.