Beyond a shadow of a doubt, if you own stock in a closely held or family business today, there will come a time in the future when you do not own or control it. This Valuation Video examines the Business Ownership Transfer Matrix that dictates that you will sell or transfer your shares, either partially or totally, and either voluntarily or involuntary. If you don’t plan ahead, the Law of Unintended Consequences may come into play. When you transfer stock involuntarily, you lose control over what happens, and things can happen that you didn’t intend. Promises may not be kept, estate taxes may be maximized, control may shift unexpectedly, and on. So plan ahead!

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.

Today I’m sharing the video, Corporate Finance Basics for Directors and Shareholders, as well as the transcript from the video. In the presentation, Travis W. Harms, CFA, CPA/ABV, senior vice president of Mercer Capital, offers a short, yet thorough, overview of corporate finance fundamentals for closely held and family business directors and shareholders.