“Single Appraiser: Select Now, Value Now” Recommendation for Buy-Sell Agreements Featured in NACVA’s QuickRead

A good explanation of the “Single Appraiser: Select Now, Value Now” recommendation from my book Buy-Sell Agreements for Closely Held and Family Business Owners was recently featured in NACVA’s email newsletter. Read it here (also includes a link to the original article on Mercer Capital’s website further explaining this buy-sell agreement recommendation).

A Quirk with Third Appraisers in Buy-Sell Agreement Valuation Processes

The role of the third appraiser is always to bring resolution to buy-sell agreement valuation processes. The question is how the third appraiser’s conclusion will be used to bring pricing resolution. In this post we see that one “typical” way of considering the third appraiser’s conclusion has in interesting and potentially dangerous twist for valuation processes.

The Parties Selected the Single Appraiser to Determine Value for Their Buy-Sell Agreement Long Before the Trigger Event

The Genesis of My Recommendation for Single Appraiser Valuation Processes

I have been advocating single appraiser valuation processes for buy-sell agreements for many years. This video relates the story of the genesis of the idea that has led me to write four books on buy-sell agreements and to participate in buy-sell agreement processes all around the nation.

Do You Know What Will Happen if Your Buy-Sell Agreement is Triggered?

Buy-sell agreements are ownership transition plans in disguise. Few business owners think about their buy-sell agreements in this light, but if your agreement is triggered, either through the death of a shareholder or otherwise, then ownership will change hands. Your buy-sell agreement is really ownership transition on autopilot. The real question is whether you, the other owners and the company will land safely when a trigger event occurs or if some or all of you will crash and burn. This short post addresses a simple question: Do you know what will happen if your buy-sell agreement is triggered?

Analyzing the BV Resources 2021 DLOM Survey

What Does it Mean for Appraisers Today?

BV Resources recently published a DLOM Survey. It had 10 questions and 202 responders. This post looks at several of the questions to infer the current state of the art in valuation regarding DLOMs. The post is longer than most but is worth your investment of time to read it and hopefully comment since the issue is key in all valuations of illiquid minority interests of companies.

New York Supreme (Trial) Court: One Buy-Sell Agreement That’s So Broke It Likely Can’t be Fixed

Buy-sell agreements can go bad if all parties to them do not pay attention to their terms before signing them. This is particularly true in the New York case of Yakuel v Gluck, which was filed in early May in the Supreme Court of New York County.

Failure to Reach Annual Agreement on Buy-Sell Agreement Pricing Leads to Litigation for Ohio Insurance Agency

Kashmiry v. Ellis Highlights Importance of Recurring Appraisal for Buy-Sell Agreements

Kashmiry v. Ellis is a recent Ohio appellate case regarding the buy-sell agreement portion of a shareholders’ agreement. The case reinforces a number of things I have been “preaching” about for years. If a buy-sell agreement has provided for an annual valuation by agreement of the parties, then the parties must reach agreement annually. If the agreement then provides for a valuation mechanism to determine the price following a trigger event, then the valuation process should be clearly defined and workable.

Urgent Warning (and Solution) to Attorneys and Business Owners re Shareholder/Buy-Sell Agreement Problems

WARNING. Portions of the great majority of buy-sell agreements (or relevant portions of operating agreements) addressing the valuation of interests when trigger events occur are seriously flawed. As a result, they are destined to create time-consuming, expensive, and emotional disputes between buyers and sellers when they are triggered. Most attorneys and business owners do not seem to believe me, but recent experience only reinforces the need for this warning post.

EBITDA’s “Naughty 11” Problems and What to Do About Them

EBITDA is at the same time the most discussed and most maligned measure of business cash flow. Simply put, EBITDA is Earnings Before Interest, Taxes, Depreciation and Amortization. The problem with EBITDA is that too often analysts or market participants or writers want to think that there is a single measure of cash flow that will reveal all, bringing Utopia to valuation. This post notes 11 things that EBITDA is not or will not do—and compares other cash flow measures according to the same criteria. Utopia does not exist and there is no valuation elixir. Sadly, we actually have to analyze companies to value them or buy them or sell them.

Promissory Note Valuation

The Second Time Around was Better Than the First

My last post described an early promissory note valuation that provided me with an object lesson in humility. This post is the follow-up to show that it is possible to learn from such lessons and to lay the groundwork for future growth. The ending of this two-part series is happier than its beginning!