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 Oregon, buy-sell agreements are contracts between co-owners of a business that outline the terms under which one owner's interest may be sold. These agreements are crucial for establishing a clear plan for the continuity of the business when one owner exits due to retirement, divorce, bankruptcy, disability, or death. The agreements typically specify who can purchase a departing owner's interest, often giving the remaining co-owner(s) the right of first refusal, and detail how the sale price will be determined, either through a pre-agreed price or a formula for valuation. While state statutes do not govern the specific content of buy-sell agreements, they must comply with Oregon's general contract laws and business entity regulations. Additionally, it is advisable for the agreements to address potential changes in ownership due to personal circumstances, such as divorce, and may require spousal consent to ensure the enforceability of the terms. An attorney can help tailor a buy-sell agreement to fit the specific needs of the business and its owners, ensuring legal compliance and addressing the unique aspects of the business structure and the owners' intentions.