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A buy-sell agreement is a contract between business partners that outlines the procedures to follow if adverse events occur during their partnership. Also called a buyout agreement or business prenup, it is established while the business relationship is strong, preparing for unexpected situations. This legal document specifies predetermined actions for common scenarios known as the "five Ds": death, disability, divorce, disagreement, and default. These situations can severely impact a business, so having a buy-sell agreement helps ensure that there is a clear plan in place, similar to the importance of having a personal will. This proactive measure is crucial for business stability and continuity.
