When a shareholder separates from a firm, the buy-sell process is often complicated, uncertain, and emotional. What ought to be an orderly process can quickly deteriorate into litigation and ruined relationships. Many buy-sell agreements indicate that the price in a shareholder buyout should be determined by way of an independent appraisal. If there is no formal buy-sell process by agreement, an appraisal will place you in a relatively strong bargaining position.
Depending on your agreement, you may need:
- An appraiser whose opinion will serve as the final transaction value for the buy-sell agreement; or
- An appraiser whom you will retain to produce an appraisal of the subject interest, and that appraisal will be matched up against or reconciled with an appraisal commissioned by the other party or parties to the transaction; or
- An appraiser who will reconcile other appraisals commissioned earlier in the buy-sell process; or
- An appraiser to recommend another appraiser to provide the value that will ultimately be used.
To produce a successful outcome where a third party appraiser’s participation is required, you need an appraisal process that is:
- Independent: Simply advocating for the client is prohibited by professional standards and will be met with fierce resistance by the counterparty. A shill valuation is much more likely to increase the challenge of the buy-sell process rather than to reduce it.
- Diligent: Care must be taken to consider all available and relevant facts in the appraisal, including those presented by the counter-party.
- Timely: The longer the buy-sell process drags on, the less likely it is to be resolved amicably.
Trust Arpeggio Advisors to facilitate your buy-sell process. Arpeggio Advisors’ commitment to independence, diligence, and timeliness enables your buy-sell process to move without delay or unnecessary conflict.
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