Multiple appraiser agreements call for the selection of two or more appraisers to engage in a process that will develop one, two, or three appraisals (business valuations) whose conclusions form the basis for the prices. There are a number of variations that can be employed in multiple appraiser process buy-sell agreements. We focus on four here and use non-technical, descriptive terms to differentiate between various types of processes.

• Two and a Tie-Breaker. Two appraisers are retained initially to provide appraisals, and a third appraiser is selected if needed to resolve disparate valuation conclusions.
• Two and a Determiner. Two appraisers are hired initially, and their sole function is to mutually select a third appraiser who provides the sole and determinative appraisal.
• Two and a Back-Breaker. Two appraisers are selected to provide appraisals, and the third appraiser picks the “better” appraisal.
• Two and Let’s Talk. There are several possibilities to this category, all of which are designed to facilitate resolution with the first two appraisers. Two appraisers are selected and they provide valuation conclusions. If their conclusions are within the specified range (10% or 15% or you pick), the price is determined as the average of the two conclusions. If not, the two appraisers are required to work together to reach a mutually acceptable conclusion. Two ways this process could work include negotiation or mediation.

All of the general forms of multiple appraiser agreements either call for, or potentially call for, the selection of a third appraiser. What is the role of the third appraiser? The role of the third appraiser is to bring resolution to the valuation process, whether as tie breaker, sole appraiser, sole determiner, mediator or otherwise. In many processes, the proverbial ox is already in the ditch when the third appraiser is named – there are two appraisals with conclusions more than __% (you pick) apart. Whether the differences relate to differing understandings or interpretations of the assignment definition or valuation assumptions and judgments, the third appraiser is expected to get the ox out of the ditch. The third appraiser’s valuation is the tool to reconcile such differences. What if, however, the differences are irreconcilable? One way of addressing these issues with multiple appraiser buy-sell agreements is to consider employing single appraiser buy-sell agreements.