What type of agreement is designed to manage the transfer of ownership of a business upon the occurrence of specific events?

A buy-sell agreement is a legal arrangement often utilized in business partnerships to outline the process for transferring ownership of a business under specific circumstances, such as the death, disability, or retirement of an owner. This agreement ensures that there is a clear plan in place, which helps to prevent disputes and protect the business's continuity. It typically specifies how the business interest will be valued and the process for the remaining owners to buy out the departing owner's share, ensuring that ownership remains with the individuals who actively manage the business.

Partnership agreements cover the general terms and conditions of a partnership but do not specifically deal with the transfer of ownership upon certain events. Shareholder agreements similarly pertain to the rights and responsibilities among shareholders but may not comprehensively address ownership transfer in the context of specific triggering events. Operating agreements generally outline the management structure and operational procedures of LLCs and do not specifically focus on ownership transfer. Therefore, a buy-sell agreement is the most suitable and targeted agreement for managing business ownership transfers.