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Buy-Sell Agreements Process-Busting Valuation Issues (Part 4 of 4)
(Excerpted from Chapter 20 of the book Buy-Sell Agreements for Closely Held and Family Business Owners) Key Person Discounts It is indisputable that some owners are more important to a business than others. The term used in the valuation literature to describe this concept was called, historically at least, the “key man” discount. Now we...
Buy-Sell Agreements Process-Busting Valuation Issues (Part 3 of 4)
(Excerpted from Chapter 20 of the book Buy-Sell Agreements for Closely Held and Family Business Owners) Marketability (or Illiquidity) Discounts Applied to Controlling Interests Many buy-sell agreements with valuation processes provide guidance suggesting that appraisers should apply no discounts because of the minority nature of any holding and that there should be no discount for the...
Buy-Sell Agreements Process-Busting Valuation Issues (Part 2 of 4)
(Excerpted from Chapter 20 of the book Buy-Sell Agreements for Closely Held and Family Business Owners) Tax-Affecting Earnings in Tax Pass-Through Entities Some appraisers believe S corporations are inherently more valuable than C corporations. They say, in effect, that since there is no corporate-level tax on earnings, the earnings should not be tax-affected for valuation purposes....
Buy-Sell Agreements Process-Busting Valuation Issues (Part 1 of 4)
(Excerpted from Chapter 20 of the book Buy-Sell Agreements for Closely Held and Family Business Owners) This is not a book about how to value businesses. There are many books that address that topic, even some of mine. However, there are at least five valuation issues that can blow a buy-sell agreement process completely out...
New Article: The Ideal Time to Review Your Buy-Sell Agreement
This article, authored by Nick Heinz of Mercer Capital and drawing on the information found in the book Buy-Sell Agreements for Closely Held and Family Business Owners, discusses the ideal time to review your buy-sell agreement. The time for a comprehensive review of your buy-sell agreement is not this year or this month – it...
Buy-Sell Agreements Article in The CPA Journal
In the June 2011 issue of The CPA Journal magazine is the article “Buy-Sell Agreements: Business Owners Benefit from Planning Ahead” by Chris Mercer. This is a comprehensive article and one we hope you will read. You can link to the entire issue here. Skip to page 64 to read the article.
Four Real Life Buy-Sell Agreement Examples to Avoid
I’ve reflected on the many buy-sell agreements I’ve reviewed in recent years. Let’s focus on four that have issues with either what appraisers call the “level of value,” or with appraiser qualifications. Any facts have been altered to protect the innocent (or guilty) as the case may be. Family business, buy-sell agreement drafted in the...
Third Appraiser Selection in Multiple Appraiser Valuation Process Buy-Sell Agreements
The purpose of the third appraiser in multiple appraiser valuation process buy-sell agreements is to bring the process to a conclusion. Sometimes, things just aren’t queued up for him or her to do the job without some adjustments to the process. Choosing the Third Appraiser Over the last several years, I’ve been involved in several...
Your Buy-Sell Agreement Won’t Work
Chapter One of my book, Buy-Sell Agreements for Closely Held and Family Business Owners, is entitled “Your Buy-Sell Agreement Won’t Work.” When I speak of “your” buy-sell agreement, I’m referring to your agreement if you are a business owner. Readers of this blog know, however, that I also talk directly to advisers of business owners....
How to Divorce-Proof Your Business with a Buy-Sell Agreement
There are a number of things you can do at the “entity” level of your business that could prevent your husband from keeping an ownership interest in your business. [in the event of a divorce] So begins Jeffrey Landers of Bedrock Divorce Advisors, LLC as he writes about using buy-sell agreements to “divorce-proof” your business. Unfortunately, divorce is...
This is the business owner’s self-defense manual. Reading it could be the most cost-effective hour or two you’ve ever invested. Don’t dare sign a buy-sell agreement until you’ve read and pondered the questions posed in this book. Your life(‘s work) may depend on it!
Stephan R. Leimberg
CEO and Publisher, Leimberg Information Services, Inc. (LISI)
About Chris Mercer
Z. Christopher Mercer, ASA, CFA, ABAR, author of Buy-Sell Agreements for Closely Held and Family Business Owners, is a nationally known business valuation expert, writer, and speaker.
Preview the Book
Written for owners of closely held and family businesses, this book provides a road map for you to develop or improve your buy-sell agreement. Selected excerpts, a full table of contents, and selected reviews are available to preview.
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