#entitypurchaseagreements

[capitalnomics]

Cross-Purchase Agreements and Entity-Purchase Agreements

There are two types of buy-sell agreements: cross-purchase agreements and entity-purchase agreements. Cross-purchase agreements allow the remaining owners to buy the interests of a deceased or selling owner. Entity-purchase agreements require the business entity to buy the interests of the selling owner. Often life insurance policies are written into the agreement. This life insurance provision provides a guaranteed source of funds to the remaining owners if a partner were to abruptly die.