Buy-Sell Agreement Pricing Should be Responsive to Changing Conditions

It has been some time since I’ve posted on this blog.  I’ve been blogging for more than a decade and have, on several occasions, taken a break.  A recent post by Matt Crow, president of Mercer Capital, on our RIA blog, RIA Valuation Insights, gives me a reason to jump back in.

Matt writes about registered investment advisors and asset management firms of all types.  In this recent post, he writes about pricing for buy-sell agreements in an industry where conditions can change materially in a short time.

I have long advocated that businesses use what we call a “single appraiser, select now and value now” valuation process.  Companies retain a valuation firm to provide an annual independent valuation for purposes of setting (and resetting) the price for purposes of their buy-sell agreements each year.

Assume you agree with the premise of annual appraisal to reset your buy-sell agreement price for your buy-sell agreement.  What happens if your market changes materially in a short time, or if there is a sudden change in your company’s fortunes?

Matt’s recent post provides one answer to this potentially perplexing question.  He writes “An All-Terrain Clause for your RIA’s Buy-Sell Agreement.”  I hope you enjoy it.  By the way, Matt has an interest in vintage automobiles, so you’ll be interested in how he makes the Audi-Ur Quattro relevant to his post.

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Be well!



My two most recent books are available in an Ownership Transition Bundle.  The bundle, priced at $35 plus s/h, has been attractive for many business owners, appraisers and attorneys.


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