Minnesota Buy-Sell Agreement
Legal Tips for Drafting Your Minnesota Buy-Sell Agreement

A website devoted exclusively to Minnesota Buy-Sell Agreements

What is a Minnesota Buy-Sell Agreement?

Whether you have chosen to form a Minnesota limited liability company (LLC), Minnesota S-Corporation, Minnesota C-Corporation, or other legal entity, if your Minnesota business has more than one business owner, it is highly recommended that you prepare a Minnesota Buy-Sell Agreement 
between the owners of the business. 

This website was designed especially for Minnesota business owners that have incorporated under Minnesota law.

A Minnesota Buy-Sell Agreement is common for "closely held" corporations and other business entities; for example, when there will be a handful of owners or in a family-owned business situation.  The Minnesota Buy-Sell Agreement typically imposes restrictions against the voluntary or involuntary transfer of ownership rights.  The purpose of these restrictions is to ensure that the ownership group approves any new shareholder.  These restrictions can also help prevent an "outsider" from becoming a shareholder through an involuntary transfer of shares; for example following a bankruptcy or divorce. 

If an owner obtains an offer to purchase his/her shares from a third party, often the Minnesota Buy-Sell Agreement will provide the corporation an "option" or "right of first refusal" to match the offer before the shareholder can sell.  Again, this is designed to control who can become a shareholder. 

Finally, the Minnesota Buy-Sell Agreement typically spells out what will happen to the owner's shares upon death, disability, resignation, or termination of employment.  Often the corporation will have an obligation to purchase the shares of the deceased or departing shareholder; at a minimum, the corporation will usually have the "option" to purchase the shares.  

The Minnesota Buy-Sell Agreement will often require the shareholders to cross-purchase policies of life insurance on the life of the other shareholders so that money is available to fund the purchase of shares upon death.

It is critical that the Minnesota Buy-Sell Agreement 
contain a formula for setting the value of the shares to be purchased.  Depending on the type of business involved, the industry in which it operates, and the goals of the shareholders, different types of valuation formulas may be appropriate under a Minnesota Buy-Sell Agreement.  These include, but are not limited to, "book value," a multiple of earnings or cash flow, a multiple of Earnings Before Interest Taxes Depreciation and Amortization (EBITDA), an "agreed upon" value, an appraised "fair market value" determined by a third party appraiser, or some combination. 

Often, the Minnesota Buy-Sell Agreement will encourage the shareholders to periodically sit down and approve an "agreed upon" value of the corporation which will control the value of the shares in the event of a triggering event such as death, disability, resignation, or termination of employment.  If the agreed value is stale (e.g., more than 12 months old), the Minnesota Buy-Sell Agreement will typically require an appraisal by a third party following a triggering event if the shareholders cannot mutually agree upon a revised value that reflects the current business circumstances facing the company.

Negotiate a Minnesota Buy-Sell Agreement Now . . . Before You Find Yourself in the Middle of a "Business Divorce"

In many ways, a Minnesota Buy-Sell Agreement operates like a prenuptial agreement entered into by spouses prior to marriage.  Going into business with others is much like getting married.  Because many businesses break up, or the shareholders reach deadlock or impasse, it is wise for the business owners to plan for the orderly breakup of the business before getting married to one another.  Regardless of how long you have been in business, however, it is never too late to draft a Minnesota Buy-Sell Agreement to ensure that the owners of the business see eye-to-eye on the key issues affecting the business.

Failure to enter into a Minnesota Buy-Sell Agreement can be catastrophic for the business and its owners.  Often, the result is costly, protracted, stressful, and contentious litigation over Minnesota minority shareholder rights.  Minnesota shareholder disputes can disrupt or even ruin a small business.  A Minnesota Buy-Sell Agreement can avoid this type of litigation.

Get Your Initial Minnesota Buy-Sell Agreement Legal Consultation Now . . .

Minnesota corporate law firm Trepanier MacGillis Battina P.A., located in Minneapolis, Minnesota, offers a two (2) hour Initial Minnesota Buy-Sell Agreement Legal Consultation for the flat fee of $400.  Click here to review the Terms and Conditions of our Initial Legal Consultation Policy or to complete the online form and schedule your initial consultation with a Minnesota Buy-Sell Agreement attorney.  Our firm will contact you to schedule an initial legal consultation to discuss your Minnesota Buy-Sell Agreement questions.

If your business is operating as a partnership, rather than an S-Corporation, C-Corporation, or LLC, then you would be wise to draft a 
Minnesota Partnership Agreement governing the sharing of profits and many of the topics typically covered in a Minnesota Buy-Sell Agreement (as discussed above).

In addition to a Minnesota Buy-Sell Agreement, shareholders of a corporation often enter into a 
Minnesota Shareholder Agreement covering topics not addressed in the Minnesota Buy-Sell Agreement.  These topics include capital calls, shareholder loans, voting rights, preemptive rights, cumulative voting rights, and virtually any other topic that the shareholders wish to address in a written agreement.  Please contact us today to discuss all of your Minnesota corporate law and shareholder questions.

Finding the Right Minnesota Buy-Sell Agreement Attorney is Important

A Minnesota Buy-Sell Agreement is one of the most important contracts you will sign.  If you need help drafting or reviewing a Minnesota Buy-Sell Agreement, you should seek the assistance of a competent Minnesota Buy-Sell Agreement attorney or lawyer.  A Minnesota Buy-Sell Agreement attorney can advise you regarding the important topics to be included in a Minnesota Buy-Sell Agreement.  An attorney can help the shareholders negotiate a fair and balanced agreement and reduce the agreements of the shareholders to writing in a legally enforceable Minnesota Buy-Sell Agreement.  If you are a Minnesota business owner, don't leave these things to chance.  Consult with a Minnesota Buy-Sell Agreement attorney from Trepanier MacGillis Battina P.A. law firm in Minneapolis, Minnesota today.

The Minnesota corporate law firm of Trepanier  MacGillis Battina P.A. in Minneapolis, Minnesota represents business and corporate clients in connection with Minnesota buy-sell agreements, Minnesota partnership agreements, Minnesota LLC member control agreements, Minnesota shareholder agreements, Minnesota shareholder control agreementsMinnesota shareholder disputesMinnesota minority shareholder rights litigation, and all aspects of Minnesota corporate law in the Twin Cities and Greater Minnesota area.  Our Minnesota Buy-Sell Agreement attorneys and Minnesota Buy-Sell Agreement lawyers represent clients in Minneapolis, St. Paul, Apple Valley, Blaine, Bloomington, Brainerd, Brooklyn Park, Burnsville, Coon Rapids, Duluth, Eagan, Eden Prairie, Edina, Lakeville, Mankato, Maple Grove, Minnetonka, Moorhead, Plymouth, Richfield, Rochester, St. Cloud, Stillwater, Twin Cities, Woodbury and other cities within the State of Minnesota (MN) (Minn.).