BC Journal

Drag-Along Rights protect majority shareholders in a buy-sell agreement by allowing them to force minority shareholders to join in the sale of a company.

If a majority shareholder receives an offer to sell the company, they can require minority shareholders to sell their own shares on the same terms and conditions. This provision is designed to prevent minority shareholders from blocking a potential sale opportunity.

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Stock Redemption Agreements are buy-sell agreements where the company owns life insurance policies on each partner. When a partner dies, the company buys out the deceased partner's estate with the insurance proceeds. This retires the deceased partner's stock and increases the surviving partner's interests proportionally. Stock redemption agreements differ from Cross Purchase Agreements, where the partners own the insurance policies.

There are pros and cons to different funding arrangements in buy-sell agreements. A competent exit planning advisor can provide personalized guidance.

#buysellagreement #lifeinsurance #stockredemption

Cross-Purchase Agreements are buy-sell agreements where partners own life insurance on one another. When a partner dies, the surviving partners use the insurance proceeds to purchase a predetermined proportion of the deceased partner's interest. Cross-purchase agreements differ from Stock Redemption Agreements, where the company owns the insurance policies.

There are pros and cons to different funding arrangements in buy-sell agreements. A competent exit planning advisor can provide personalized guidance.

#buysellagreement #lifeinsurance #crosspurchase