What can a more sophisticated buy-sell agreement provide that simple right of first refusal provisions in the Articles of Organization cannot when there is one of those changes?
While buy-sell agreements serve key corporate and individual shareholders purposes, the frequently encountered problem is that most closely-held businesses have only the simplest of agreements. They often fail to solve the financial and governance problems that may undermine an orderly transition in the ownership of the business. Many companies are incorporated with only boiler-plate first refusal language in their Articles of Organization.. A sophisticated buy-sell agreement will address key tax issues and also determine who is the selling party, the buying entity, and the source of the funds – usually either a promissory note secured by certain provisions for payment from future income or better yet a corporate split-dollar insurance policy or some combination of the two.
Related Questions
- What can a more sophisticated buy-sell agreement provide that simple right of first refusal provisions in the Articles of Organization cannot when there is one of those changes?
- How does an organization move from simple accounting to more sophisticated financial management described above?
- What are the Articles of Organization and Operating Agreement?
