Family Business Succession Planning

Overview of Buy-Sell Agreement Forms

Agreement form	Buyer	Works well with	Unsuitable for
Wait and see	Business entity, co-owner, or both	Business with two or more owners	Sole proprietor and single-shareholder corporation
Trusteed cross purchase	Co-owner Transaction overseen by trustee	Business with two or more owners Simplifies plan when large number of owners	Sole proprietor and single-shareholder corporation
Entity purchase (stock redemption)	Business entity	Business with two or more owners	Most expensive type
Section 302 stock redemption*	Business entity	Business with two or more owners	Sole proprietor and single-shareholder corporation
Section 303 stock redemption*	Business entity	Business with two or more owners, especially family business	Sole proprietor and single-shareholder corporation
Reverse Section 303 stock redemption*	Business entity	Business with two or more owners, especially family business	Sole proprietor and single- shareholder corporation
Cross purchase (crisscross) agreement	Co-owner	Business with two or more owners	Sole proprietor and single-shareholder corporation Large number of owners (gets complicated with four or more)
Option plan	Business entity, co-owner, or any eligible third party Sale not guaranteed	Business with any number of owners, including sole proprietorship and single-shareholder corporation	Any scenario where guaranteed sale is needed
One-way buy-sell	Business entity, co-owner, or any eligible third party	Business with any number of owners, including sole proprietorship and single-shareholder corporation	Sole proprietor with no willing buyer

*Section refers to an Internal Revenue Code Section.