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

A buy-sell agreement serves an essential function in business ownership by establishing a legal contract that details how shares or ownership interests in a business are to be handled in the event of a shareholder's death, disability, or exit from the company. The primary purpose of such an agreement is to ensure a smooth transition of ownership, providing clarity and pre-established terms for the remaining shareholders and the heirs of the departing owner. This minimizes potential conflict and uncertainty regarding ownership interests, facilitating a fair valuation process and ensuring that shares are sold to the remaining partners or shareholders rather than to outside parties, which would disrupt the business's continuity.

The other options, while they pertain to various business operations, do not capture the main intent of a buy-sell agreement. For instance, determining partner salaries is a separate aspect of partnership management not covered by this agreement. Similarly, strategies for raising capital or guidelines for resolving disputes among partners are not the focus of a buy-sell agreement, which is specifically designed to address ownership changes, making the correct answer particularly relevant in understanding its principal role in business continuity and stability.