Entity Purchase Buy-Sell Agreement Template

What Is the Entity Purchase Buy-Sell Agreement?

An entity purchase buy-sell agreement is a contract that gives the company itself (not individual owners) the right and obligation to purchase a departing owner's interest. The company owns life insurance policies on each owner and uses the proceeds to fund death buyouts. When the company purchases interests, those interests are either retired (increasing remaining owners' percentages) or held as treasury stock for future issuance.

This structure requires fewer insurance policies than cross-purchase agreements, simplifies premium payments through company funds, and centralizes buyout administration. It's particularly advantageous for businesses with 4+ owners where cross-purchase insurance becomes administratively burdensome.

 

 

Is This Entity Purchase Buy-Sell Agreement Right for You?

You need this agreement if you're:

• A business with 4+ owners seeking simplified insurance administration
• Co-owners wanting company-funded buyouts rather than personal purchase obligations
• Partners with one uninsurable owner where company-owned policies provide solutions
• Business wanting centralized control over ownership transitions and buyout execution
• Companies preferring to retire purchased interests and adjust remaining ownership
• Owners without current succession planning or buy-sell protections

You definitely need this agreement if:

• An owner dies and the company lacks funds to buy their interest
• Multiple life insurance policies create administrative nightmares for cross-purchase structures
• An owner's family demands immediate cash or unreasonable buyout prices
• Disabled or terminated owners refuse to sell their interests voluntarily
• One owner attempts selling to competitors or inappropriate third parties

 

 

Why Thousands Trust Legal GPS Templates

Save Money – Attorney buyout agreements cost $3,000-$8,000. This template costs $35.

Save Time – Download your template immediately. No scheduling delays or attorney billable hours.

Look Professional – Attorney-drafted language and comprehensive structure that institutions respect.

Keeps You Out of Court – Comprehensive Triggering Events provisions prevent buyout disputes. Detailed Payment Terms and Closing articles protect both company and departing owners. The Funding Mechanisms section prevents cash crises with company-owned insurance.

 

 

 

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Step 3: Fill In the Highlighted Fields

Replace bracketed sections with your company details and preferences. Your attorney-quality agreement is ready.

 

Frequently Asked Questions

Can I use this template multiple times?

Yes. Use it for your initial agreement, then reuse it when ownership changes or when you add new owners who need to join the agreement.

Is this contract legally binding?

Yes, when properly completed and signed by the company and all owners. The agreement creates enforceable company obligations for buyouts and restricts transfers to protect existing ownership.

How is an entity purchase agreement different from a cross-purchase agreement?

In an entity purchase agreement, the company itself buys departing owners' interests using company-owned life insurance. In a cross-purchase agreement, individual owners buy each other's interests directly with personally-owned policies. Entity purchase is simpler for 4+ owner businesses.

How many life insurance policies do I need for an entity purchase agreement?

One company-owned policy on each owner. Four owners need 4 policies total, compared to 12 policies required for a cross-purchase structure. The company owns all policies and is the beneficiary.

What happens to ownership percentages when the company buys an interest?

If you choose to retire purchased interests, remaining owners' percentages automatically increase proportionately. If you choose to hold as treasury interests, the company retains them for potential future issuance without affecting existing owners' percentages.

Can the company afford installment payments for non-death buyouts?

The template includes flexible payment terms including installment options and earnouts. Your company should model scenarios before selecting payment terms to ensure affordability while protecting departing owners.