A Buy-Sell Agreement Story

Introducing the Single Appraiser, Select Now and Value Later Process

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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.

He Bet and “Won” with a Fixed-Price Buy-Sell Agreement

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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.

Story of a Fixed Price Buy-Sell Agreement with an Unhappy Ending

Don't Bet the Farm or the House or the Business

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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.

The Promissory Note You Receive May Undermine the Fair Market Value of Your Stock

Buy-Sell Agreement Seller Beware | A Lesson via Video

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Many buy-sell agreements will fail to deliver the fair market value of interests sold following trigger events, even if the valuation of the interests are exactly on point. I’ve written briefly about this topic before, but provide elaboration here.

How to Avoid Problems with the Definition of “Disability” in Buy-Sell Agreements

A Valuation/Business Lesson on Video

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In this post’s video, I briefly address the definition of disability in a real buy-sell agreement, explain why it will not work if there is a trigger event, and offer an objective suggestion to avoid problems with the definition.

How to Avoid Valuation Problems with Life Insurance Associated with Buy-Sell Agreements

A Valuation Lesson on Video

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One of the biggest and recurring problem with buy-sell agreements is their frequent failure to specify the role of life insurance proceeds. In the accompanying video, I provide a suggestion to solve the future valuation question.

Fixed Price Buy-Sell Agreements and the Tax Cut and Jobs Act of 2017

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Since the idea of a fixed price buy-sell agreement is appealing and conceptually simple, many companies employ it. The problem is that the parties seldom reset the prices in their fixed price agreements — a major problem in the current environment considering the value of many businesses changed under the new tax law. In this post, we consider the impact of the Tax Cut and Jobs Act on fixed price buy-sell agreements.

Buy-Sell Agreements Stories

A Tortuous Buy-Sell Agreement Process

One day a number of years ago, I received a call from an attorney. On that initial call, he told me about a bizarre buy-sell agreement process that was underway. The attorney represented a company. Based on a buy-sell agreement of some age, an option provided by the agreement had been triggered, and one of the companies had the right to acquire the company at its fair market value.