Shotgun buy-sell agreements are occasionally found in some older buy-sell agreements, although we seldom see them recommended for buy-sell agreements today. These buy-sell agreements determine the price (per share or per unit or per member interest) at which the identified future transactions will occur. The shotgun process will determine the price at which future transactions will occur, but no one knows until an offer is made what that price will be. As with formula and fixed price buy-sell agreements, shotgun buy-sell agreements appear simple. However, there are disadvantages to shotgun buy-sell agreements.

1. Implicit assumptions may not hold. The parties seldom have equal financial capacities and may have different knowledge about the business. For example, a non-operating shareholder may be at a distinct disadvantage in terms of making an offer to buy. Assume there are two operating partners, each owning 50%. Certainly a shotgun agreement is fair, or is it? Assume further that one partner dies. The surviving spouse is not active in management and might be at a distinct disadvantage.
2. Minority shareholders may be at a disadvantage. It is easier for a 90% shareholder to acquire a 10% interest than vice-versa. A smaller shareholder, unable to swing the big deal, may have to offer a relatively low price in order to ensure his capability to either buy or sell, thereby increasing the odds that the other side will buy.
3. Uncertainty as to final outcome. Relative to fixed price and formula buy-sell agreements, there is great uncertainty as to what will happen when a shotgun agreement is triggered. Sellers usually don’t want to become buyers, or vice versa. The changes you see in the price over time may cause you to reevaluate the use of any shotgun in your buy‑sell agreement.