The Buy-Sell Agreement Nobody Read

The buy-sell agreement was six years old. Nobody had looked at it since the day they signed it.

That’s not unusual. Most haven’t been. You sign it at formation, your attorney tells you it covers the major scenarios, and you file it away because you have a business to run. The partnership feels solid. You trust each other. The handshake still means something.

Then one partner gets a health diagnosis that changes everything about his timeline. And suddenly the agreement everyone assumed would handle this moment is the thing creating the fight.

I’ve been in that room — not as the attorney who drafted the original agreement, but as the one brought in after it stopped working.

The Agreement Existed. That Wasn’t Enough.

These partners weren’t adversaries before the health event. They’d built something real together over more than a decade. The problem wasn’t bad faith. It was a document that hadn’t been updated to reflect the business they actually had — and that turned what should have been a hard but manageable conversation into a dispute.

Three things broke down almost immediately.

The valuation method in the agreement was tied to book value. 

The business had grown significantly since formation, and its real value bore almost no relationship to what the books showed. One partner was looking at a buyout number that represented a fraction of what he’d actually built. The other partner had no legal basis to pay more — the agreement said what it said.

The triggering event language was written for a clean scenario. 

Health event causing incapacity. What they had was something murkier — a diagnosis that affected his capacity to work in the short term but wasn’t a clean trigger under the language in the document. Whether the provision even applied was a genuine legal question — and genuine legal questions are expensive to resolve.

The buyout timeline assumed the buying partner could access capital in 90 days. 

He couldn’t. The business’s cash position had changed, the financing environment had changed, and 90 days wasn’t a realistic window. But that’s what the agreement required, and that created its own set of problems.

None of these were drafting errors in the original document. They were provisions that made sense at formation and hadn’t been revisited as the business evolved. The gap between what the agreement said and what the partners assumed it meant was where the dispute lived.

What the Litigation Actually Looks Like

Both partners have attorneys. The relationship was effectively over regardless of how the legal questions resolved.

The valuation disagreement alone can take most of a year to work through. Expert witnesses. Dueling appraisals. Depositions about what the partners understood the valuation methodology to mean when they signed the agreement years earlier. That’s not an abstract process — it’s expensive, it’s distracting, and it happens while the business is still trying to operate.

The triggering event question requires briefing. There’s a real legal argument on both sides when agreement language is ambiguous, and courts don’t resolve those arguments quickly or cheaply.

What the dispute costs in total — legal fees, management distraction, damage to the business’s value during the process — is a multiple of what a buy-sell agreement review would have cost at any point in the preceding years.

I’ve seen this pattern more than once. The agreement exists. The partners are genuinely good people. Nobody anticipated that the document they signed at formation would become the center of a fight they didn’t see coming. But agreements that aren’t reviewed don’t update themselves — and businesses change faster than the documents that govern them.

What a Current Agreement Would Have Changed

If the valuation methodology had been updated the last time the equity structure changed — which is a natural moment to review it — the buyout number isn’t a surprise to either partner. It’s a figure they’ve both agreed reflects the business’s actual value. That changes the entire conversation.

If the triggering event language had been sharpened to address the range of health scenarios that actually occur — not just clean incapacity — there’s less to argue about when something real happens. The agreement does the work it was written to do.

If the timeline had been revisited when the business’s capital structure changed, the buying partner has a realistic path to completing the buyout and the selling partner has a realistic expectation of when he gets paid.

None of these changes are complicated. They’re a review — probably two to three hours of attorney time — and they happen when nothing is wrong, which is the only time they can happen without a fight attached to them.

This is what the litigation background does for how I approach agreements. I know which provisions become arguments because I’ve argued about them. When I review a buy-sell agreement, I’m not reading it to see if it’s technically complete. I’m reading it for the gaps that surface in a deposition years from now.

Three Questions Your Agreement Should Be Able to Answer

Most buy-sell agreements were drafted at formation and haven’t been revisited since. Here are three questions yours should be able to answer today — without ambiguity.

If your partner faced a serious health event tomorrow, what happens? Is the triggering language specific enough to cover what’s actually likely to occur, or does it only address a clean scenario that rarely happens exactly that way?

If the buyout provision triggered today, what’s the valuation methodology — and does it reflect what the business is actually worth? Book value may have been reasonable at formation. Does it reflect your business today?

Can your partner sell or transfer their interest to someone you’ve never met? What does your agreement say about outside buyers, and what approval rights do you actually have?

If you can’t answer those questions confidently, that’s the problem. 
Not the partnership — the document.

When was the last time you read your buy-sell agreement?

Adam Witkov is a litigation-trained business attorney and equity partner at Michael Best & Friedrich LLP. He serves as outside general counsel to growth-stage and family-owned businesses across Wisconsin, with particular focus in healthcare and manufacturing.