Creating a reliable buy-sell agreement — A valuation provision must be at its heart

Description

Abstract: A buy-sell agreement can be an important tool in smoothing any business ownership transition — whether the aim is to maintain control, provide liquidity and a ready market for the stock, retain key employees, or ensure an orderly ownership transfer in the case of death, disability or divorce. And at the heart of every successful buy-sell agreement is a well-reasoned, supportable value. This article explains the various approaches a valuator might use to set the price in a buy-sell agreement and ensure the resulting valuation is objective and fair to all shareholders.