What typically triggers a buy-sell agreement among partners?

A buy-sell agreement among partners is typically triggered by a partner exiting the business. This type of agreement provides a framework for what happens when a partner leaves, whether due to retirement, death, disability, or decision to sell their interest. It is crucial for ensuring that the remaining partners can buy out the exiting partner’s share of the business at a predetermined price or based on a specific valuation method. This helps maintain stability within the business and prevents disputes among partners over the terms of such transitions.

In contrast, planning for business expansion, profit sharing adjustments, and company rebranding do not inherently create a need for a buy-sell agreement. While these activities might influence the overall management of the partnership or corporation, they do not typically require the immediate execution of a buy-sell arrangement as they do not address the exit of a partner. Therefore, the scenario of a partner exiting is the most significant trigger for initiating a buy-sell agreement.