As noted above, repurchase agreements generally contain an valuation clause with the terms of the buyout and often a definition of value. „Fair value“ and „fair market value“ are two commonly used definitions of value, but they are distinct and different concepts of art. They have very different effects on the value of the dollar that an accountant or accountant would get to determine the value of an interest in a business. It is therefore important to define the value standard applicable to the repurchase agreement. 2. If the first offer is not accepted, the selling shareholders could force the board of directors to pursue a sale under management of the entire company in order to obtain the highest possible value for all shareholders. Any offer that leads to a higher value than the first offer would be accepted and all shareholders must participate. If the best offer is smaller than the first offer, shareholders who do not sell would have the right to enter into a transaction at a lower value. In general, all of these provisions are intended to streamline situations in which the SME no longer wants a particular owner to be part of the business when an owner wishes to sell or when an owner wishes to acquire the shares of another. Whether it is a dead end or simply a voluntary departure, each of these provisions guarantees a smooth transition.
Here too, as mentioned above, unwanted owners are not SMEs. 3. „Texas Auction“: This mechanism offers an interesting way to determine fairness, as the introductory shareholder sets a price for his interests and agrees to be either a buyer or a seller in a transaction. The problem is that a shareholder who wants to attract cash must instead buy the rest of the business in order to have sufficient control for the sale. If neither party can close the transaction, the penalty is often a forced sale of the business. So, of course, there`s a trigger event. If z.B. an owner dies unexpectedly and there is no up-to-date value certificate, the surviving owners (depending on the sale agreement) must repurchase the interest of the deceased owner, which requires an assessment. If the annual valuation is seen as a kind of insurance premium, homeowners will be aware of why the annual assessment is an attractive business. It provides a value before the event is triggered and before the parties are identified as a buyer or seller. The auditor submits the evaluation report and the owners have the opportunity to read it, comment and have value in hand.
If a trigger event occurs during the year, value conflicts should be reduced, as the parties have already agreed on a value.