Question 1

Why is a buy-sell agreement important for my business?

Accepted Answer

A buy-sell agreement protects both the business and the owners’ families by ensuring:
 • Business continuity if something happens to an owner
 • Fair compensation to the departing owner or their heirs
 • Avoiding disputes over ownership shares
 • Financial security since the agreement is backed by insurance funding

Without a buy-sell agreement, unexpected events could lead to conflict, financial strain, or even the loss of the business.

Question 2

When should I set up a buy-sell agreement?

Accepted Answer

The best time to create a buy-sell agreement is as early as possible — ideally when the business is first formed or when new partners join. Waiting until an owner becomes ill, disabled, or passes away can make it too late to secure affordable insurance or protect the business properly.

Wilson Insurance helps Cincinnati business owners put buy-sell agreements in place now, so they can avoid costly disputes and ensure a smooth transition in the future.

Question 3

How do you fund a buy-sell agreement?

Accepted Answer

The most common way to fund a buy-sell agreement is with life insurance or disability insurance on each owner. This provides the money needed for the remaining owners to buy out the departing owner’s share without draining business assets or taking on heavy debt.

Wilson Insurance helps businesses structure and fund buy-sell agreements with the right coverage.

Question 4

What types of buy-sell agreements are there?

Accepted Answer

There are two main types of buy-sell agreements:
 • Cross-Purchase Agreement: Each business owner purchases life or disability insurance on the other owners. If one owner leaves or passes away, the remaining owners use the insurance proceeds to buy their share.
 • Entity-Purchase (Stock Redemption) Agreement: The business itself owns the insurance policies and buys back the departing owner’s share directly.

Question 5

What happens if my business doesn’t have a buy-sell agreement?

Accepted Answer

Without a buy-sell agreement, your business could face serious challenges if an owner leaves unexpectedly due to death, disability, or retirement. The departing owner’s share might pass to heirs who aren’t involved in the business, leaving remaining owners without control. It could also lead to disputes, financial strain or even force the sale of the business.

A properly funded buy-sell agreement prevents these problems by creating a clear plan and ensuring the money is available to carry it out.

Buy Sell Agreement

...Why is it Important for Your Business to Have Buy Sell Agreements?

If you co-own a business with someone, then Buy-Sell Agreements are crucial to have.

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