Buy-sell agreement withstands “unconscionable” valuation formula
Special Legal Report to businessvaluation.com by Sherrye Henry, Esq., Legal Editor, Business Valuation Update
Estate of Cohen v. Booth Computers, 2011 WL 2694288 (N.J. Super)(July 13, 2011)
After amassing a considerable fortune in publishing and other industries, a father created an income-producing partnership on behalf of his three children. His attorneys drafted the partnership documents and the [...]
Does your shareholder agreement cover valuation issues?
Don Bays (Henry & Horne) reminds all business owners of the need need for a well-written shareholder agreement—particularly in the area of determining the value of the business. Key concerns include the following:
Valuation date: What is the date of the valuation of the departing (or deceased’s stock)? Is it the date of termination? The [...]
Report from ACG: Transaction Costs And Risks Rise; Buyers Change
BV.com has attended three of the major “intermediary” meetings in the last several months, beginning with the IBBA and AM&AA Annual Meetings. But, the dean of the group is InterGrowth, held last month in San Diego. This is the largest gathering of members and leaders of the Association of Corporate Growth (ACG).
Different market segments, different [...]
Why do buy-sell agreements fail? Here’s a list
Chris Mercer’s (Mercer Capital) has some fantastic materials on buy-sell agreements,available on the firm’s website. BV.com particularly recommends his review checklist for senior management and private company owners who are starting (or should be starting) this process.
Does your buy-sell agreement with your partners favor the survivors?
Tim Lee (Mercer Capital), who works on huge numbers of agreements, notes that funding mechanisms are often left vague in buy-sell agreements he sees. “Even when there’s insurance, it’s often not specifically claimed by the buy-sell,” he says. “You can’t be too specific about how this will be handled.”
The result is that survivors [...]
Will you have to settle for less than the real value of your company?
It’s an interesting question these days for buyers and sellers. “These days, a private equity investor will see intrinsic value as lower than M&A value might be if the seller won’t roll over cash,” says Michael Poole (PCE), speaking now at the ASA/CICBV Annual BV Conference. “They figure that the sellers must be worried or [...]
Large companies don’t want to disclose litigation contingencies to investors
businessvaluaton.com is following the story of the August 18th letter signed by a host of Association of Corporate Counsel’s leading members. ACC and many of their members believe that the proposed disclosure requirements about impending risks from litigation will alert the tort bar to insurance and other funds that can be pursued–delaying settlements and counterproductively inducing [...]
Selling your company to management sounds like a good idea, but…
by Dave Kauppi, CBI, principal at MidMarket Capital Advisors, LLC
Many owners think that selling their company to their management team is a great way to reward loyal employees for years of service. This article discusses difficulties the owner’s exit planning team will have implementing a management buy-out and puts forth an alternative approach which accomplishes [...]
Are you going to offer stock options to key employees? You’ll need a valuation under 409A regs
Neil Beaton, National Valuation Partner for Grant Thornton and a great friend to BV.com, reminds our readers that stock options require annual business valuations. He was quoted on this subject last week by Business Week: “In 2004 legislation was passed that resulted in IRS code section 409A, which governs deferred compensation. Most stock [...]
Be careful about valuation clauses in your buy-sell; a court may decide it’s all you have!
Earlier this year, when reviewing the shareholder’s request for a statutory buy-out under Texas law, the bankruptcy court concluded that it had three options to value his 8% interest: 1) the shareholder’s expert valuation; 2) book value; or 3) the buy-sell provision in the company’s shareholders’ agreement.
The shareholder’s expert used a capitalization of income approach [...]
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