Buy-sell agreements provide a procedure for a partner or stockholder to acquire the interests of another who exits the business. Oftentimes, the basis of a buy-sell agreement is an independent valuation. A professional valuation prevents distortions that can be caused through the application of a prescribed formula. Due to unanticipated changes in the business or business environment, formulas that appeared reasonable when the agreement was drafted may not equitably capture the current value. Formulas used should be updated frequently, with the help of an expert valuator, to ensure that they continuously reflect the parties' intentions.
