Buy-Sell Agreements (CONT’D FROM PAGE 26)
the business as an ongoing enterprise for the employees and the customers. “The need to ensure that the business thrives and serves a mix of constituents means that the price will likely be a little bit lower than if the sale were to a third-party buyer,” says Brownell. Some family businesses try to resolve such conflicts by inviting both sides weigh in. “Many buy-sell agreements have provisions that call for both seller and buyer to get appraisals,” says Travis W. Harms, the leader of Mercer Capital’s Family Business Advisory Services Group ( mer- cercapital.com ). “The idea is that if the two results differ within a specified percentage, then everyone agrees to accept an average of the two.” Unfortunately, what seems on the surface like a good solution too often turns out to be yet another source of conflict. An appraiser will usually shade the business value assessment to reflect the interests of whoever is footing the bill. “Once the parties are locked into a conflict it is rare that the conclusions of the respective appraisers will be very close,” says Harms. “The upshot is that the business ends up hiring a third appraiser. Not only does this take time and money, but there is still plenty of room for argu- ment. Inevitably, one or both parties will be unsatisfied and that can lead to hard feelings and litigation.” It’s tempting to try to head off the above conflicts by
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