Based on our experience, far more buy-sell agreements with valuation processes are multiple appraiser agreements than single appraiser agreements.

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 whose conclusions form the basis for the final prices.  If this sounds like it might be time consuming, cumbersome, and expensive, it is.  Such processes can also be divisive and foster litigation.

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 reconciler, determiner, judge, 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 variations relate to differing understandings or interpretations of the assignment definition, to valuation assumptions and judgments, or to actual bias, the third appraiser is expected to get the ox out of the ditch.  The third appraiser’s valuation is the tool to reconcile the differences.

What if, however, the differences are irreconcilable?  One way of addressing these issues with multiple appraiser agreements is to consider employing single appraiser agreements.

For information on the different types of multiple appraiser process agreements, see here.  For information on single appraiser process agreements, see here.