Without one, a deceased owner's interest may pass to their heirs (who may not be wanted in the business). A well-funded buy-sell with insurance gives the surviving owners the cash to buy out the deceased's share and gives the heirs liquidity.
Glossary · entities
Buy-sell agreement
In plain English
A contract among co-owners of a business that says what happens to an owner's interest on death, disability, or exit — often funded with life insurance.