Building the Better Buy-Sell Agreement

Apple is one of the largest and most celebrated companies in the world. Apple, like so many start-ups, began with three friends in a garage, Steve Jobs, Ronald Wayne and Steve Wozniak, who founded Apple Computer on April 1, 1976. The least known member of the trio is Mr. Wayne, who purportedly wrote the three men's original partnership agreement and originally owned 10% of what would eventually become the most valuable company in the world. However, less than two weeks into the life of the enterprise, Mr. Wayne relinquished his equity for less than $1,000. So how and why did he sell equity that would eventually be worth $70 billion for less than $1,000? As the story is told, the why was Mr. Wayne's concerns about assuming personal liability for the debts of Apple (if not paid, creditors may generally enforce their debt claims against the personal assets of general partners). The how is explained by a commonly used business arrangement called a “buy-sell” agreement.