Buy-sell agreement definition refers to the core description of a contract among business co-owners that sets terms for the purchase and sale of an ownership interest upon specified events. At its essence, a buy-sell is a pre-arranged exit plan: it defines trigger events, identifies eligible buyers, establishes valuation methods, and details payment terms. This foundational definition anchors more detailed discussion of variations like cross-purchase, entity-purchase, and wait-and-see agreements and clarifies that the purpose is not merely to buy insurance but to manage control and liquidity when owners exit unexpectedly or over time.

Advisors start many business-succession conversations by offering a clear buy-sell agreement definition before diving into technical structures. They explain that the agreement is a legally binding contract supported"but not replaced"by insurance funding. Training materials, glossaries, and web content often include concise definitions to ensure that owners, advisors, and centers of influence share a common baseline understanding. Once the definition is established, advisors can layer on specifics like valuation formulas and tax considerations. Understanding the definition helps keep planning discussions focused on purpose and outcomes rather than just documents and premiums.