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A buy-sell agreement is a contract among business partners that outlines how to handle adverse events during their partnership, essentially planning for the unexpected. Also known as a buyout agreement, business will, or business prenup, it is created while the business is thriving to address potential future issues. Drafted by a lawyer, it establishes pre-determined actions for scenarios known as the "five Ds": death, disability, divorce, disagreement, and default. These events could severely impact the business, so having a buy-sell agreement ensures there is a clear plan in place, similar to having a personal will, to guide decisions and actions when challenges arise.
