Buy-sell agreements govern transfers on death, disability, departure, or deadlock. Disputes involve whether a trigger occurred, the valuation method, payment terms, and whether the price is enforceable.
Formula and appraisal valuation methods produce different results.
Alternative Names:
Buy-Sell Dispute|Shareholder Agreement Dispute
Why it Matters?
Stale valuation formulas are the recurring problem, since agreements setting a fixed price or a formula that was never updated can produce a value bearing no relation to the business decades later. Courts generally enforce agreed valuation methods even where the result is harsh, treating the agreement as the parties' allocation. Periodic revaluation provisions are what prevent the outcome, and their absence is a drafting failure that surfaces at the worst moment.
Frequently Confused with
Related terms
Frequently asked questions
Are stale valuation formulas enforced?
What prevents the problem?
