buy-sell agreement

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Buy-sell agreements are limits placed on ownership rights of closely-held organizations which require the shares be resold to either the organization or current partners when the owner decides to leave or passes away. Many partnerships and proprietorships require new owners to sign buy-sell agreements to keep control over who is in the business. Unlike large, public companies, owners of closely-held organizations often have a lot of control within the business, and the owners want to make sure no one can give their stake in the business to an untrustworthy person. A buy-sell agreement prevents any form of transferring the ownership except back to the business or other owners by any means including in a will. 

See also: Buyout agreement

[Last updated in November of 2021 by the Wex Definitions Team]