Business owners enter into stock-purchase agreements to facilitate buyouts upon certain triggering events, such as a shareholder’s death or divorce. But a recent Minnesota Court of Appeals case shows how courts sometimes disregard these agreements, leaving minority and controlling shareholders vulnerable to court-ordered buyouts. This article points out how business valuation experts can help ascertain whether the appraisal provisions of a stock-purchase agreement remain relevant and provide updated appraisals when needed.
Before starting any appraisal assignment, it’s imperative to map out the appropriate “standard of value” to ensure that everyone arrives at the same point. If not, the parties are likely to end up off course or in need of backtracking. This article discusses various standards of value — fair market value, strategic value and fair value — and when each standard may apply.