A buy-sell agreement lets surviving owners buy out a deceased or departing owner’s share at an already-agreed price — funded, in a cross-purchase structure, by each owner carrying life insurance on the others.
How it works
Each owner’s buyout value is simply their ownership percentage applied to the agreed business valuation — the amount the other owners together need insured on that owner’s life to fund the purchase.
What this does not include
This computes a cross-purchase structure’s per-owner insurance need — an entity-purchase (redemption) structure, where the business itself owns the policies and buys back the share, has different funding mechanics this calculator doesn’t model.
How to use this calculator
- Enter the agreed business valuation.
- Enter this owner’s ownership percentage.
Frequently asked questions
Why does each owner need their own policy on the others?
In a cross-purchase structure, each surviving owner directly buys the departing owner’s share, so each needs enough insurance proceeds to fund their portion of that purchase.
What happens if the business valuation changes over time?
The agreement (and the insurance funding it) should be reviewed periodically — an outdated valuation can leave a significant funding gap when the buyout actually triggers.
Is a buy-sell agreement only for death?
No — many agreements also trigger on disability, retirement, or voluntary departure, each of which may need its own funding approach, such as this site’s disability buy-out calculator for the disability trigger.
