Three weeks after the funeral, an email arrives. Someone your partner has never heard of has heard the news, is very sorry, and would like to make an offer on the business. The number is in the second paragraph. Your partner reads it four times at the kitchen table. They can't tell if it's generous or an insult. They don't know what the business earns in a normal month, or which customers would leave, or whether this stranger is the only person who will ever ask. All they know is that the hosting bill comes due on the fifteenth, and that saying no might mean nobody else ever writes.

This is how a lot of small businesses change hands when their owner dies. It isn't a sale. It's closer to salvage, run by the person who knows the least, at the worst possible time, against a buyer who knows exactly how bad that timing is.

If you have a co-founder, there's a standard tool for this: a buy-sell agreement, a contract that settles ahead of time who buys a departing owner's share and at what price. Most solo founders assume it doesn't apply to them, since there's nobody to buy them out. That assumption is the gap. A sole owner arguably needs a buy-sell agreement more than anyone, because no partner exists to step in by default.

Why a business is worth least the week after its owner dies

In 1970, the economist George Akerlof described what he called "the market for lemons." When a seller knows much more about a product than the buyer does, buyers protect themselves by assuming the worst and offering less. Good products get priced like bad ones, and sometimes the market stops working altogether.

Now apply that to a business whose owner just died. The asymmetry runs in a strange direction. The buyer can't verify much, because the only person who could answer their questions is gone. So they discount for every unknown: churn, undocumented code, a key customer relationship that may have been personal. But the seller, your family, often knows even less than the buyer. They can't tell a reasonable discount from a predatory one. Uncertainty pushes the price down from both sides.

Then there's time. A business with no operator starts decaying right away: support tickets go unanswered, payments fail, rankings slip. Every week of waiting makes it worth less, and every sophisticated buyer knows that. Negotiation researchers call your best fallback the BATNA, your best alternative to a negotiated agreement. Your family's BATNA is watching the thing they can't run fall apart. That isn't a negotiating position. It's a countdown.

And they'll be negotiating while grieving. Bereavement reliably makes it harder to concentrate, take in information, and weigh tradeoffs. People in acute grief often want to get decisions over with, or avoid them entirely. Both instincts are understandable, and both are expensive when the decision is a sale.

What a buy-sell agreement actually changes

A buy-sell agreement moves the hardest decisions out of that moment and into this one, while you're alive, informed, and not in a hurry.

For a sole owner, the usual form is a one-way buy-sell agreement: a contract between you (and, effectively, your estate) and one named buyer, who agrees to buy the business, or gets the right to buy it, when a set trigger happens. Death is the obvious trigger. Many agreements also cover permanent disability. It's worth thinking about both.

Four decisions make up the core of the agreement:

Who the buyer is. For a one-person company this usually means someone who already understands the business, or could pick it up quickly. That might be a long-time contractor, a peer founder in a nearby niche, a competitor you respect, or a customer for whom your product is critical infrastructure. The question isn't who would pay the most in theory. It's who could take over without the business dying in the gap.

How the price is set. This is the part that saves your family. The agreement either fixes a price, sets a formula (for example, a stated multiple of trailing revenue or profit), or requires an independent appraisal on a defined timeline. A fixed price goes stale quickly, so many agreements use a formula or commit both parties to updating the price on a regular schedule. Either way, your partner no longer has to judge whether a number is fair. You already did.

Obligation or option. In a mandatory agreement, the buyer must buy and the estate must sell. With a right of first refusal or an option, the buyer gets first claim but isn't bound. Mandatory gives your family certainty. An option is easier to get someone to sign. Neither is wrong, but your family should know which one they have.

How it gets paid for. A buy-sell agreement is only as good as the buyer's ability to write the check. A common answer is life insurance: the buyer owns a policy on your life, and the payout funds the purchase. Structure matters here. In Connelly v. United States (2024), the Supreme Court held that life insurance a company held to redeem a deceased owner's shares counted toward the company's value for estate tax purposes. That's a good reason to have an attorney and a tax advisor design the funding instead of improvising it. Other options include installment payments to the estate over several years, often secured against the business itself.

The part nobody tells you: the conversation is the asset

The legal document matters. But much of a buy-sell agreement's value comes from what it forces before anyone signs.

To set a formula, you have to know what your business is worth and why. To pick a buyer, you have to picture someone else running the thing you built, which most founders quietly avoid. Psychologists describe the endowment effect, our habit of valuing what we own above what others would pay for it. Founders carry an extreme version of this, and it tends to show up in one of two ways: "nobody could run this but me" or "this is worth far more than anyone will offer." Both feelings are about identity, not price. A buy-sell negotiation brings them into the open while you can still do something about them.

The buyer gets something too: a reason to understand your business now. A person who has agreed to buy your company if you die will start asking good questions, like where the documentation is, who the big customers are, and what breaks if the founder disappears for a month. Those questions are the start of a handoff. So even if the trigger never happens, you end up with a business that's less fragile.

There's also a quieter benefit, and it may be the biggest one. When your partner opens that email from a stranger three weeks after the funeral, they won't have to decide anything. They can forward it to the person you already chose and the attorney who wrote the agreement, then go back to grieving. You can't spare them the loss. You can spare them the auction.

Your next moves

  • Write down three possible buyers by name today. Not categories, actual people: one contractor or collaborator, one peer or competitor, one customer who depends on you. Next to each, write one sentence on why they could keep the business alive.
  • Put together a one-page valuation memo. List your trailing twelve months of revenue and profit, your monthly churn, your biggest customers' share of revenue, and the method you'd use to value the business. You need it to negotiate a formula, and it's the first thing an appraiser or buyer will ask for.
  • Have a 20-minute exploratory conversation this month with your top candidate. Ask plainly: "If something happened to me, would you want first claim on this business, and what would you need to know to say yes?" Their answer will tell you whether you're looking at a mandatory agreement, an option, or a different buyer.
  • Book a consultation with a business attorney and bring the memo. Ask specifically about a one-way buy-sell agreement or a right of first refusal, disability as well as death triggers, and how to fund the purchase in light of Connelly.
  • Tell your partner or executor the plan exists, and write down where the agreement is kept and who to call. An agreement your family doesn't know about can't protect them from the offer in their inbox.

Where Heirloom fits

A buy-sell agreement is only one page of a larger handoff. Your family also needs the buyer's contact details, the location of the signed agreement, the valuation memo, and the credentials that let a new owner take over before things decay. Heirloom was built for that: a death binder for solo founders that keeps the vault, the handoff instructions, and your beneficiaries in one place, so the person you chose and the people you love are working from the same plan. If you've just written three names on a page, it's a good place to put them. See how Heirloom works.