Buy-sell agreements are agreements/contracts between co-owners of a business, and provide the circumstances in which one of the owners can sell their interest; who can buy a co-owner’s interest; and how the sale price will be determined. Despite the somewhat confusing name, these buy-sell agreements are not relevant when both owners wish to sell the business to a third party (person or entity other than the two owners).

Because buy-sell agreements are only relevant when one of the co-owners’ interest is being sold, these agreements generally apply when a co-owner retires, gets divorced, goes bankrupt, becomes disabled, or dies. Buy-sell agreements usually provide for the remaining co-owner to buy the exiting co-owner’s interest in the business at an agreed-upon price, or to calculate the purchase price using an agreed-upon method of valuation (for valuing the company). It may be easier to think of these agreements as buyout agreements, as one owner is typically buying-out the other owner. Buy-sell agreements should carefully address these situations in which an owner is likely to exit the business, or in which the ownership of the business might otherwise change—for example, upon the divorce of an owner—and include the agreement and signature of the co-owners’ spouses if necessary.

In Mississippi, buy-sell agreements are contracts among co-owners of a business that outline the terms and conditions under which an owner's interest in the business may be sold. These agreements are crucial for establishing a clear plan for the continuity of the business when one owner retires, divorces, declares bankruptcy, becomes disabled, or passes away. The agreements typically specify who is eligible to buy an exiting owner's interest, such as the remaining co-owners, and how the sale price will be determined, either through a pre-agreed price or a valuation method. While Mississippi law does not have specific statutes governing buy-sell agreements, these contracts are subject to general contract law principles and must be crafted to ensure they are legally binding and enforceable. It is advisable for the agreements to address potential changes in ownership and to include the consent of spouses when necessary, to prevent future disputes. Business owners in Mississippi often work with an attorney to draft a buy-sell agreement that is tailored to their specific business needs and complies with applicable laws.