Rights of first refusal (ROFRs) are not the same as buy-sell agreements. They may seem to operate like a buy-sell agreement, in that they provide procedures related to possible future stock transactions. But ROFRs do not assure that transactions will occur.

My challenge to readers is to eliminate obvious problems with your buy-sell agreement that can be easily avoided with regard to selection of an appraiser.

There are fewer than 150 words in the Purchase Price Section quoted above. I have written about 2,400 words talking about the nuances in the paragraph. If I can do this while only thinking about it, consider what the parties might do following a trigger event, particularly if the financial stakes are high.

I am not sure that all the parties to the agreement referenced in this post read it carefully. If they had, someone surely would have objected to giving the Corporation the right to acquire the shares of any owner who divorced, even when the shares might not be in danger of being awarded to on out-spouse. This post illustrates the point I have made many times in my book, Buy-Sell Agreements for Closely Held and Family Business Owners, and in this blog. If you have a buy-sell agreement, it is important for you to read it and to understand what it says.

The purpose of the third appraiser in multiple appraiser valuation process buy-sell agreements is to bring the process to a conclusion. Sometimes, things just aren’t queued up for him or her to do the job without some adjustments to the process.

When drafting your buy-sell agreement, understand that the other guy will not always be the first to die or to leave the company. It might be you. If you know you will be a buyer, then you would likely prefer to buy at the lowest possible price. If you know you will be a seller, then you probably would prefer to sell at the highest possible price. If you don’t know which you will be (and you likely do not) and you act rationally, you will desire pricing in the buy-sell agreement that is reasonable regardless of future outcomes.

… The biggest contribution of this book may lie in emphasizing the importance of crafting well-drafted, unambiguous, and comprehensive buy-sell agreements, put in place and reviewed periodically to avoid the unintended consequences.

“Who owns the stock after a trigger event?” is an important question. Many buy-sell agreements do not treat the continuing rights of ownership (or not) following trigger events in specific terms.