Weak buy-sell agreement leads to lengthy litigation

Description

Abstract: Closely held businesses often rely on buy-sell agreements to ensure a smooth transition when an owner exits the company. But the agreement also needs to provide a clear method for valuing the shares for repurchase. This article describes a court case that resulted when a buy-sell agreement didn’t include the value for company stock shares and the two parties couldn’t subsequently agree on a valuation method. A sidebar explains why using valuation formulas in a buy-sell agreement can be problematic.