While the form of business entity focuses on third party liabilities, rights and obligations, a Shareholders Agreement or Buy-Sell Agreement focuses on the relationship, rights and obligations among the owners. These agreements address many matters that may otherwise lead to litigation. For example, a well-designed buy-sell agreement should address:

    •    Impasse resolution & “business divorce”

    •    Transfer restrictions and rights of first refusal

    •    Initial capital contributions & equity vesting

    •    Withdrawing owner’s equity & purchase rights

    •    Additional capital contributions – obligations and penalties

    •    Deceased owner’s equity

    •    Representation on the Board of Directors

    •    Drag-along right (forced sale of minority ownership with majority ownership)

    •    Co-sale right (right of minority owner to participate in sale with majority owner)

    •    Permitted transfers for estate planning