Buy-Sell Agreement Attorney · Nashville
A buy-sell that pays
the day the trigger fires.
Drafted by a Tennessee attorney and CPA. Funded so the wire arrives, not the IOU.
By Knight Lancaster, JD, CPA · Last reviewed May 2026
The document that decides who owns it next.
A buy-sell agreement is the document that tells the company who owns it next, what the price is, and where the money comes from. For a closely held business with two or more partners or shareholders, it is the most important governance document in the file. It is also the one most often drafted from a form, signed, and forgotten until a partner dies, divorces, or quits.
We draft buy-sells for Tennessee business owners that cover the actual triggers, set a valuation method that holds up under a court's reading, and identify the funding source on the day the document is signed, not the day the trigger fires.
The right time to draft is at formation, before any partner has reason to think about what their share is worth. The next-best time is now. By the time one partner has decided to leave, valuation arguments are already loaded. Drafting during a calm period gives every owner the same incentive to write fair terms. Drafting during a partner dispute does not.
The six triggers a real buy-sell covers.
A template document often handles death and retirement and stops there. The document needs to handle six. Each one has its own funding source and its own price.
Death
The interest moves on stated terms.
The deceased owner's interest passes to a successor or back to the company on a defined formula. The company keeps running. The family receives fair value without a probate fight over what the share is worth.
Disability
Funded separately from the death policy.
A long-term disability triggers a buyout funded by a disability-buyout policy, not life insurance. Disability is the trigger that fires more often. It is the one most template documents skip.
Divorce
The spouse does not become a co-owner.
A divorcing owner's spouse is forced out by the buy-sell or routed to a transfer back to the divorcing owner alone. The remaining partners keep the company they built.
Departure
Voluntary withdrawal, retirement, planned exit.
The remaining owners purchase the departing owner's interest on stated valuation and stated payment terms. The exit is a transaction, not a dispute.
Deadlock
Ends a partner dispute with a buyout.
Two or three partners who built the company together do not always agree ten years later. A deadlock provision routes a stalemate into a buyout instead of into a lawsuit.
Default
Bankruptcy, conviction, or breach.
The remaining partners buy the interest at a defined price before a creditor, a trustee, or a stranger steps into the equity ledger.
Formula, appraisal, or agreed value.
Three valuation methods hold up under a Tennessee court's reading. The right one depends on the business, the relationship between the owners, and how often the company's value moves. We pick a method and write it in plain English so a court does not have to interpret it later.
| Formula | A stated multiple of EBITDA, revenue, book value, or a hybrid, calculated as of the trigger date. Cheap and predictable. Risks staleness if the business outgrows the formula. |
| Appraisal | A qualified business appraiser sets the price at the trigger date. Typically $5,000 to $20,000 per appraisal. Defensible and fair, slower and more expensive at the moment of trigger. |
| Agreed value | The owners meet annually and sign a stated value. The document defaults to formula or appraisal if the meeting has not happened in 60 days. |
"A buy-sell with no funding is an IOU. An IOU does not pay anyone."
Funding the buyout.
A buy-sell with no funding is an IOU, and an IOU does not pay anyone. We coordinate the policy structure with the client's life insurance agent and the financing terms with the client's banker so the document and the actual funding agree. When the trigger is death, the proceeds become an estate matter for the family. We route that conversation to the estate planning side when it lands.
The source
Life insurance
What it does
The cheap part of the answer for the death trigger. The company or the co-owners hold the policy. Cross-purchase or redemption mechanics decide who is the owner and who is the beneficiary.
The source
Disability buyout insurance
What it does
A separate policy for the disability trigger. Frequently skipped. Disability is the trigger that actually fires more often than death across the working life of a typical partnership.
The source
Sinking fund
What it does
The company sets aside cash over time. Workable for an LLC. Tax-inefficient inside a C corporation, where the retained earnings carry their own corporate-level tax cost.
The source
Seller financing or bank debt
What it does
The buying owners give the departing owner a note, or borrow from a bank to pay cash at close. The most common funding source for owner-to-owner buyouts in the $2M to $20M range.
Cross-purchase, redemption, or hybrid.
Cross-purchase means the surviving business partners buy the departing partner's interest directly. Redemption means the company buys the interest and retires it. The choice drives the basis the surviving partners hold, the tax characterization at funding, and the cash mechanics.
A hybrid (some triggers cross-purchase, some redemption) is common for three-or-more-partner businesses. The right structure runs on the tax math, not the form template. The lawyer who is also the CPA reads both at once.
The buy-sell does not live alone.
For a Tennessee LLC, the buy-sell is usually incorporated into the operating agreement. For a corporation, it lives inside or alongside the shareholder agreement. For a partnership, the partnership agreement carries it. The same hand drafts the buy-sell and the operating, shareholder, or partnership agreement that it sits inside. The provisions agree because the same hand wrote them.
The Tennessee Revised LLC Act (Tenn. Code Ann. § 48-249) gives the operating agreement broad authority to control how member interests are transferred at death, withdrawal, or sale. A Tennessee operating agreement that is silent on succession defaults to statute, and statutory defaults are often not what the owner wanted.
Lancaster Law executes operating-agreement amendments, buy-sell agreements, and signing-day closings using Tennessee Remote Online Notarization, which lets owners sign from any state without the file losing its Tennessee character.
Every buy-sell decision has a money side. Cross-purchase or redemption changes the surviving owner's basis by hundreds of thousands of dollars. A C corporation sinking fund carries a corporate-level tax cost an LLC sinking fund does not. A life-insurance funding choice routes the proceeds through the estate or around it. As a CPA, Knight sees the money side and the legal side at the same time, so the document he drafts is the one that pays the buyout and the one that does not surprise the survivors on the next return. Tennessee bar admitted, dually licensed as a Certified Public Accountant, recognized in Best Lawyers in America.
The buy-sell, the operating agreement, and the tax return, drafted by the same hand.
Buy-sells, answered.
How much does a buy-sell agreement cost in Nashville?
A standalone buy-sell agreement for a two-owner Tennessee LLC is typically a defined flat fee. A buy-sell-plus-operating-agreement bundle is a higher flat fee. A multi-party negotiation, an inside transition with rolling triggers, or a buy-sell-plus-trust-funding package is hourly with a clear estimate. We quote a specific dollar amount after the first conversation.
What if I am the only owner of my business?
A traditional buy-sell agreement requires more than one owner. For a sole-owner business, the equivalent documents are a comprehensive operating or shareholder agreement that addresses death and incapacity, plus a personal estate plan that names who inherits or buys the interest. A key-person insurance policy and a designated successor manager named in the operating agreement complete the package. We draft the set together.
How often should a buy-sell be reviewed?
Every three years, and any time a trigger comes close. The valuation method, the funding sources, and the trigger list all age. A buy-sell drafted at formation that has not been updated in ten years is rarely the right document for the company as it sits today.
What goes wrong with a template buy-sell?
Three things, in our experience. The trigger list covers death and retirement only, leaving disability and divorce uncovered. The valuation method is a formula that has gone stale. The agreement is unfunded, so a death or disability triggers a buyout the surviving owners cannot finance. We draft to fix all three.
Cross-purchase, redemption, or hybrid — which is right for my company?
Cross-purchase means the surviving partners buy the interest directly and step up their basis. Redemption means the company buys the interest back and retires it. A hybrid splits across triggers. The choice runs on the basis math, the funding source, and the number of owners. Three-or-more-partner companies often land on a hybrid. We model the after-tax outcome before we pick the structure.
Can the same firm draft the buy-sell and prepare the resulting tax filings?
Yes. Knight is a Tennessee attorney and a licensed CPA. The Lancaster CPA Firm prepares the corporate, partnership, and trust tax returns that come out of the legal work. Owners who hire one firm for the document and the resulting filings tend to find the math comes out tighter than splitting the work across two firms.
Reviewed by Knight Lancaster, JD, CPA, MBA
Knight Lancaster is the founder of Lancaster Law, P.C. and The Lancaster CPA Firm, P.C. in Nashville, Tennessee. He is one of a small number of attorneys in Tennessee who is also a licensed CPA, giving him a dual perspective on the legal documents and the tax returns that follow them. Knight has been recognized in Best Lawyers in America, Ones to Watch (Corporate Law), in 2023 and 2024, and serves on the Board of Directors of the American Academy of Attorney-CPAs. He earned his JD and MBA from Belmont University (the first graduate of Belmont's joint JD/MBA program) and a BS in Accounting from the University of Tennessee. Before founding Lancaster Law, Knight practiced at Bone McAllester Norton (now Spencer Fane), where his work focused on mergers, acquisitions, dispositions, and securities matters.
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This article is for educational purposes only and is not legal advice. Reading it does not create an attorney-client relationship. For advice specific to your situation, contact Lancaster Law directly.
Tennessee Bar
Practicing since 2019
Triple credential
JD · CPA · MBA
Peer-reviewed
Best Lawyers, Ones to Watch, 2023 + 2024
National board
American Academy of Attorney-CPAs, Director
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