Buy-Sell Agreement Planning Checklist Page 13
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16How will the shares of the company be valued?
Event
Fair
Pre-
By
Market
Determined
Formula
Value
Price
Death of the shareholder
Long-term disability
Retirement from the business
Marital breakdown
Resignation
Termination
Bankruptcy of the shareholder
Desire to sell
Minority interests
Will valuation be pro-rata or factor in minority interest discounts or control premiums?
Life Insurance
Will the receipt of life insurance proceeds affect the value of the business interest for the
purposes of the buy-sell agreement? Yes
No
Periodic review of the buy-sell agreement
If the price is pre-determined, does it properly reflect the value of the business?
Yes
No
The pre-determined price will be reviewed: (Please check one)
Monthly
Bi-annually (min. recommended)
Quarterly
Tri-annually
Semi-annually
Every five years
Annually (recommended)
Other (specify)
In the event of a significant change to the operations of the business, such as selling a
significant income-generating asset or a wind down and liquidating dividend, the buy-sell
agreement should be updated immediately.
A pre-determined price valuation should default to a formula or valuation should the
parties fail to update the valuation at the specified times.
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