What is the primary purpose of buy-sell arrangements in shareholder agreements?

Buy-sell arrangements are pivotal components of shareholder agreements, primarily designed to facilitate smooth transitions of ownership in a company and to mitigate potential disputes among shareholders. These arrangements establish predetermined protocols for the sale or transfer of shares, often triggered by specific events such as the death, disability, or voluntary departure of a shareholder.

By clearly outlining the terms and conditions under which shares can be bought or sold, buy-sell agreements help prevent conflicts that may arise from differing valuations or unexpected share transfer scenarios. In doing so, they promote stability within the business and ensure that remaining shareholders can maintain control and continuity. This proactive approach balances the interests of both the company and its shareholders, making it an essential tool in managing ownership dynamics.

While the other options mention potential benefits or motivations behind shareholder agreements, their primary focus does not capture the central objective of buy-sell arrangements as effectively as addressing dispute resolution and ownership transition.