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  • Article Check - Shareholder Agreements and Buy Sell Agreements - The Business Valuation Formula

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    here are several approaches that we see used in determining the Purchase Price for shares of selling shareholders. The most common is Net Book Value
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    Normally shareholder agreements or buy sell agreements are written by the majority shareholder's very smart and experienced attorney and are totally favorable to the majority shareholder/Corporation. The minority interest shareholders are required to sign these agreements and often do not understand all the implications of what they are signing until it is too late. I will define too late as when they are trying to exit the business and get a liquidity event at a value that is reasonably close to the value of the company multiplied by their percentage ownership in the company.

    There are several approaches that we see used in determining the Purchase Price for shares of selling shareholders. The most common is Net Book Value

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    favorable to the majority shareholder/Corporation. The minority interest shareholders are required to sign these agreements and often do not understand all the implications of what they are signing until it is too late. I will define too late as when they are trying to exit the business and get a liquidity event at a value that is reasonably close to the value of the company multiplied by their percentage ownership in the company.

    There are several approaches that we see used in determining the Purchase Price for shares of selling shareholders. The most common is Net Book Value

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    stand all the implications of what they are signing until it is too late. I will define too late as when they are trying to exit the business and get a liquidity event at a value that is reasonably close to the value of the company multiplied by their percentage ownership in the company.

    There are several approaches that we see used in determining the Purchase Price for shares of selling shareholders. The most common is Net Book Value

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    t a liquidity event at a value that is reasonably close to the value of the company multiplied by their percentage ownership in the company.

    There are several approaches that we see used in determining the Purchase Price for shares of selling shareholders. The most common is Net Book Value

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    here are several approaches that we see used in determining the Purchase Price for shares of selling shareholders. The most common is Net Book Value. What net book value means is that you take all the assets and subtract all the debts and you get the shareholder equity or net book value. To the untrained observer that would seem fair and logical. In reality, it is simply an accounting presentation and generally has no relationship to what the business is really worth. An example is a company that owns a prime piece of real estate for their factory and the neighborhood has become hot. That facility was acquired in 1968 for $2 million with half of the value in the building and half in the land. The building has been depreciated

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