Buy & Sell Agreements
Business & Commercial
Protect your business and partnership interests with a legally sound buy and sell agreement.
A buy and sell agreement (also referred to as a buyout agreement) is a legally binding document that outlines what will happen to a business owner’s share if they leave the business, become incapacitated, retire, or pass away. These agreements are a critical part of any robust business succession plan, particularly for partnerships and privately owned companies.
At Burgess Thomson, we work closely with clients to draft, review, and advise on buy sell agreements tailored to the unique needs of your business. With decades of experience advising companies across Newcastle and the Hunter region, our team can ensure your agreement provides certainty and protects the long-term value of your business.
Why You Need a Buy and Sell Agreement
Whether you operate a small business, a professional partnership, or a growing private company, having an agreement to buy and sell business interests in place is essential. It sets out the rights and obligations of the remaining owners and the departing party (or their estate) in the event of:
- Death or permanent incapacity of a partner or shareholder
- Voluntary or involuntary exit from the business
- Bankruptcy or insolvency
- Disputes between co-owners
- Divorce or other personal changes affecting ownership
Without a clearly defined buy sell agreement, the business can face unnecessary disruption, financial strain, or even collapse due to ownership uncertainty.
What a Buy Sell Agreement Covers
A well-drafted buy sell agreement for small business or partnership includes detailed provisions to reduce ambiguity and risk. At Burgess Thomson, we help you clearly define:
- Triggering Events: What events will require a buyout? Common triggers include death, disability, retirement, or dispute.
- Valuation Method: A buyout agreement should set out how the business or owner’s interest will be valued using fixed pricing, independent valuation, or a formula-based approach.
- Funding Mechanisms: These may include life insurance policies, business profits, or instalment arrangements.
- Right of First Refusal: Remaining owners typically have the first right of refusal to purchase the departing owner’s share before it is offered to external parties.
- Buyout Terms and Timing: Including how and when payments will be made, any restrictions on selling to third parties, and dispute resolution processes.
Whether integrated into a partnership agreement, shareholders agreement, or set out as a standalone contract, buy and sell agreements help maintain continuity, fairness, and control.
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Buy Sell Agreements for Partnerships and Small Business
In small and medium-sized enterprises, especially those with family or closely held ownership, personal relationships can complicate business decisions. A buy sell agreement between partners creates clarity from the outset, ensuring that no partner’s family, ex-spouse, or unrelated third party can acquire a stake in the business without the consent of the other owners.
A business buy out agreement is not just about legal compliance. It’s about protecting the legacy you’ve built, maintaining operational stability, and avoiding costly disputes that can damage the business and its reputation.
Why Choose Burgess Thomson?
At Burgess Thomson, our buy sell agreement lawyers take the time to understand your commercial structure, goals, and risks. We will:
- Tailor your commercial agreement to reflect your business and ownership structure
- Collaborate with accountants and financial advisers to ensure alignment on valuation and funding
- Minimise the potential for future conflict through precise and practical drafting
- Provide advice on incorporating a buyout agreement into existing legal documents
- Ensure compliance with relevant legislation and best practice
We have worked with a wide range of businesses across Newcastle, Lake Macquarie, Maitland, Port Stephens and beyond, delivering trusted legal solutions that help clients plan with confidence.
Secure the Future of Your Business Today
If you are starting a business with partners, expanding your company, or reviewing your succession plan, now is the time to put a comprehensive buy and sell agreement in place.
Contact us today to speak with an experienced lawyer and ensure your business is protected against the unexpected.
Frequently asked questions
What events trigger a buy-sell agreement?
Events that may trigger the clauses of a buy-sell agreement include death, injury or illness, divorce, retirement, major disagreement between partners, or any other occurrence that leads a co-owner to depart from the business.
Who uses buy-sell agreements?
Buy and sell agreements are commonly used by sole proprietorships, partnerships, and corporations.
What are the types of buy-sell agreements?
There are two forms of buy-sell agreements:
- Cross-purchase agreement – the remaining owners purchase the share of the business that is for sale
- Redemption agreement – the business entity buys the share of the business
What are the capital gains tax implications?
Depending on the business structure and the way the buy-sell agreement operates, the insurance policies may be self-owned by the owners or taken out over the lives of the other owners, or they may be owned by the company or a trustee of a super fund.
If a buy-sell agreement triggers payment of a life insurance policy, it will be exempt from CGT provided the gain or loss is made by:
- The original beneficial owner of the policy;
- An entity that acquired the policy for no consideration;
- The trustee of a complying superannuation fund.
A trauma or total and permanent disability insurance policy is subject to CGT if it is owned by the business. Only a trauma or total and permanent disability insurance policy owned by the insured is exempt from CGT.