Buy Sell Agreements

Buy-sell agreements can be used as a succession planning tool that provides an exit strategy for owners and business continuity. Agreements that use predetermined formulas to establish a transaction price are rarely a reasonable proxy for fair market value, since business and industry conditions can change over time. In addition, formulas used in buy-sell agreements may not be accepted by the IRS as indicative of fair market. It is becoming more common for buy-sell agreements to stipulate that transactions must occur at fair market value. Other agreements with investors and creditors may involve “triggering” events that also require a fair market value estimate. At FairValue Advisors, our appraisals are used to assist with buy-out and buy-in pricing, as well as the potential obligations resulting from buy-out clauses and triggering events.