Minnesota Buy-Sell Agreement Template
The Minnesota rules that shape the document: the 2023 non-compete ban that does not reach an owner sale-of-business covenant, and the Section 302A.751 fair-value buyout.
Introduction
A buy-sell agreement is a contract among the owners of a Minnesota business that spells out ahead of time who may buy an owner's share, how it is valued, and which events, such as death, disability, divorce, or departure, trigger the buyout. In Minnesota, two rules shape the document beyond the national template. First, the 2023 non-compete ban in Minnesota Statutes Section 181.988 voids covenants not to compete, but that ban is scoped to the employee and independent-contractor relationship and expressly does not reach an owner's covenant given during the sale of a business; Section 181.988 subdivision 2(b)(1) lets the seller and the buyer agree on a temporary, geographically reasonable covenant, so a Minnesota buy-sell owner non-compete is governed by common-law reasonableness rather than the flat ban. Second, Minnesota Statutes Section 302A.751 lets a court order a fair-value buyout of an owner's shares as the preferred alternative to dissolution, computed without minority or marketability discounts, which your valuation clause should anticipate.
Key Things to Know
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A Minnesota buy-sell agreement is a binding contract among the co-owners of a business that fixes who can buy a departing owner's interest, the price or valuation method, and the triggering events, so a death, divorce, or exit does not force the Minnesota business into a dispute or a sale to an outsider.
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Minnesota is an equitable-distribution state, not a community property state, so a Minnesota buy-sell agreement needs no community-property spousal-consent clause. The two rules that actually shape the document are the Section 181.988 non-compete carve-out and the Section 302A.751 fair-value buyout.
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Minnesota's 2023 non-compete ban, Minnesota Statutes Section 181.988, voids covenants not to compete, but it is scoped to the employee and independent-contractor relationship and does not reach an owner's sale-of-business covenant. A Minnesota buy-sell owner non-compete is carved out of the ban.
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In Minnesota, Section 181.988 subdivision 2(b)(1) lets the seller and the buyer of a business agree on a temporary, geographically reasonable covenant not to compete. So a Minnesota buy-sell owner non-compete is enforceable under a common-law reasonableness standard: reasonable geographic area and reasonable length of time.
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In Minnesota, Section 302A.751 lets a court order the sale of a shareholder's shares to the corporation or the moving shareholders at fair value as a preferred alternative to dissolution. A Minnesota buy-sell valuation clause can set the owners' own method instead of leaving price to that determination.
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Minnesota fair value under Section 302A.751 is computed without a minority or marketability discount, and if the parties cannot agree it is fixed under Section 302A.473 subdivision 7. A written Minnesota buy-sell is evidence of the owners' reasonable expectations, so keep the valuation current.
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A Minnesota buy-sell agreement requires no notarization, witnesses, or government filing. It is valid as a signed writing under Minnesota's statute of frauds (Minnesota Statutes Chapter 513). Keep the signed Minnesota agreement with the company records and update the valuation periodically.
Key decisions before you file
Before you file a Buy-Sell Agreement in Minnesota, a few decisions shape the document: which option to choose and what each one means. The Buy-Sell Agreement guide walks through them.
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Minnesota Requirements for Buy-Sell Agreement
Minnesota Statutes Section 181.988 voids covenants not to compete, but the 2023 ban is scoped to the employee and independent-contractor relationship. It does not reach a covenant an owner gives during the sale of a business, so a Minnesota buy-sell owner non-compete is carved out of the flat ban.
Minnesota Statutes Section 181.988 subdivision 2(b)(1) lets the seller and buyer of a business agree on a temporary, geographically restricted covenant not to compete. A Minnesota buy-sell owner non-compete is enforceable under this common-law reasonableness standard: a reasonable geographic area and a reasonable length of time. A dissolution covenant is permitted under subdivision 2(b)(2).
Minnesota Statutes Section 302A.751 lets a court order the sale of a shareholder's shares to the corporation or the moving shareholders at fair value as the preferred alternative to dissolution. Minnesota fair value carries no minority or marketability discount. Draft the buy-sell valuation clause to set the owners' preferred method. LLC members have a parallel remedy under Section 322C.0701.
Under Minnesota Statutes Section 336.8-204, a transfer restriction is effective against a later buyer only if it is noted conspicuously on the share certificate, or, for uncertificated shares, the registered owner has been notified. Add the legend when your Minnesota company issues or endorses certificates so the buy-sell restrictions bind.
A Minnesota buy-sell agreement is valid as a signed writing under Minnesota's statute of frauds (Minnesota Statutes Chapter 513). No notarization, witnesses, or government filing is required. As an equitable-distribution state, Minnesota also needs no community-property spousal consent. Keep the signed agreement with the company records and update the valuation periodically.
Frequently Asked Questions
It is a contract among the owners of a Minnesota business that sets who may buy an owner's interest, the price or valuation method, and the triggers such as death, disability, divorce, or a voluntary exit. It keeps ownership inside the group and prevents disputes when a Minnesota owner leaves.
An operating agreement or bylaws set how the Minnesota business runs day to day. A buy-sell agreement covers only ownership transitions: what happens to an owner's share on death, disability, divorce, or departure, how it is priced, and who may buy it. Many Minnesota companies keep both.
Yes. Minnesota Statutes Section 181.988 voids covenants not to compete, but that ban is scoped to employees and independent contractors. Section 181.988 subdivision 2(b)(1) carves out an owner's sale-of-business covenant, so a Minnesota buy-sell non-compete is enforceable if reasonable in area and time.
No. Minnesota's 2023 ban in Section 181.988 reaches the employee and independent-contractor relationship, not an owner's covenant given during the sale of a business. Under subdivision 2(b)(1) the seller and buyer may agree on a temporary covenant in a reasonable geographic area for a reasonable length of time in Minnesota.
Minnesota Statutes Section 302A.751 lets a court order the sale of a shareholder's shares to the corporation or the moving shareholders at fair value as a preferred alternative to dissolution. Minnesota fair value carries no minority or marketability discount, so a clear buy-sell valuation clause can set the method used.
No. There is no notarization, witness, or filing requirement in Minnesota. A buy-sell agreement is valid as a signed writing under Minnesota's statute of frauds (Minnesota Statutes Chapter 513). Keep the signed Minnesota agreement with the company records and update the valuation periodically.
Minnesota owners commonly use life or disability insurance on each owner, a sinking fund, or installment payments from the buyer. Pre-funding matters because a Minnesota buyout can otherwise be priced at fair value under Section 302A.751. Match the funding to your valuation so the agreed price can be paid.