June 4, 2014. Great! You and your colleagues realize you need a buyout agreement for your company. For purposes of a buy-sell provision, value can be determined by the market value (if there is a market for the company’s equity), appraised value, book value, a formula, mediation, set by agreement at the annual meeting. Or any number of other approaches and variations. Conflicting interests will be at play, such as the desire to provide liquidity while preserving the company’s ability to continue in business. However, if the parties to an agreement are determining how value will be established for a buy-out at a point when they do not know whether they will ultimately be on the buying or selling end of the bargain, the chosen approach is more likely to be fair than it would be if the parties were forced to resolve the issue after a need had arisen. So at the end of the day, settle on one of the methods and get the buyout done and in place. It is better to have the agreement complete and be able to revise it later than to have a triggering event occur and be stuck with a co-owner you do not want or stuck in a business you need to exit.
For more information regarding business law and how to value ownership for purposes of a buyout, contact the Goosmann Law Firm at info@goosmannlaw.com or call 712-226-4000.
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