„Fair value“ does not have a common definition, but is used differently by accountants, lawyers and the courts. AICPA uses fair value for fair value measures in Accountant Codification (ASC) 820, Fair Value Measurements and Disclosures. However, lawyers and courts use the term in property disputes. When developing a sales contract, owners must take into account the language they wish to use and the consequences of using the language in different contexts. In addition to controlling the business, purchase and sale agreements also define ways to assess a partner`s value. This may have opportunities to use shares outside of the issue of buying and selling shares. Yes, for example. B, a dispute over the value of the business or the interests of a partner arises between the owners, the valuation methods contained in the purchase and sale agreement would be used. A sale-sale form contains details on who can or cannot buy the shares of the abandoned or deceased owner, how the shares can determine, and what events lead to the sale contract coming into effect. For example, the agreement may prevent owners from selling their shares to outside investors without the consent of other owners. Similar protection may be granted in the event of a partner`s death.
„If you retire and you can`t sell the business, what about it? You either have to take care of yourself or be one of your children, you have to consider selling to a major employee or changing companies,“ she explains. „There are a lot of business planning tools, and a buyout contract is just one.“ For a corporate controller, fair value may mean that certain valuation discounts should be applied to the value of an uncontrolled or „minority“ stake. These discounts reflect the non-dominant nature of the interests and may also reflect the lack of marketing of an interest in a private company. When these discounts are applied, the value of a non-dominant interest is significantly less than the value of a dominant interest. To avoid pitfalls in the development of sales and sale contracts, contractors should consult with both lawyers and accountants and appraisers to ensure that the language of the purchase-sale contract is intended for owners and that all owners understand the impact of these definitions.