What is the primary purpose of a buy-sell agreement?

The primary purpose of a buy-sell agreement is to provide a mechanism for the purchase of a business interest in the event of an owner's death. This agreement is crucial for business continuity, as it establishes a clear plan for how the deceased owner's share will be handled. It typically involves a pre-established price and conditions under which the surviving owners or the business itself will buy out the deceased owner's interest, ensuring that the business remains stable and operational without familial complications or external interference after a partner's passing. This is vital for both the financial security of the remaining owners and the deceased's beneficiaries, as it helps to facilitate a smooth transition and reduces potential disputes around the ownership of the business.

The other choices, while relevant in a business context, do not pertain specifically to the fundamental goal of a buy-sell agreement. For instance, investment strategies, market risk assessments, and employee compensation are important for business operations but are not the primary function of a buy-sell agreement, which distinctly focuses on ownership transfer issues arising from the death or departure of one of the owners.