The idea for naming the appraiser at the time a buy-sell agreement is signed was not original to me. I first heard of the idea in the late 1980s when I learned that I had been named as the appraiser in a buy-sell agreement that had been signed a few years before. However, since learning of the idea, I’ve adopted it and promoted it widely in my books and articles on buy-sell agreements.
Customer service is something that we cannot think about enough. It’s applicable whenever we (or our companies) interface with customers, whatever the nature might be. This post describes two such customer service interfaces I encountered on a recent trip to Minneapolis to deliver a speech. One was good and the other was not so good.
While many buy-sell agreements call for the issuance of promissory notes for at least partial funding of purchases, there is no corollary consideration of the fair market values of the promissory notes to be issued. A previous post discussed promissory notes in terms of rates and terms. This post examines the concept of the fair market value of promissory notes issued in connection with buy-sell agreements.
Promissory notes are used as funding mechanisms in many buy-sell agreements. Yet the potential notes to be issued when trigger events occur are often given little thought by drafting attorneys or parties to buy-sell agreements. They should because the terms of these promissory notes matter both to issuing companies and to receiving shareholders who sell their shares.
Today I discuss another buy-sell agreement story where shareholders bet on the company’s value upon a trigger event. This story’s protagonist “wins;” unfortunately, the same cannot be said for the other shareholders. While the price was updated annually, incongruent contexts led to a dichotomy in the price of what should have been paid and what was actually paid per the agreement.
More than a decade ago, I was writing my first book on buy-sell agreements. While I was working on it, a long-time friend, let’s call him William, who had significant knowledge about the value of businesses, called me to relay a true story about how one buy-sell agreement ended very badly for his family.
About three years ago, I was interested in buying a smartwatch, and the Fitbit offerings were not very appealing. Not to be snobbish, but Fitbit simply did not have a watch product that I was willing to wear every day. So I bought first generation Apple Watches for my wife, Cathay, and me about three years ago. Along the way, there was a celebration of something, and I bought a second generation watch for Cathay. My watch, after a couple of fixes during warranty, performed well — until it quit performing— with a bit of help from Apple.
In a 1983 case, Blasingame v. American Materials, Inc., 654 S.W. 2d 659 (Tenn. 1983), the Supreme Court of Tennessee adopted what is called the “Delaware Block” method for determining the fair value of shares in dissenters’ rights cases in Tennessee. This method, considered alone, was already outdated by precedent case law in Delaware when Blasingame was issued. However, in the recent Athlon Sports Communications case, the Tennessee Supreme Court finally brings Tennessee dissenters’ rights appraisal determinations more in line with the majority of states.