About Z. Christopher Mercer

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So far Z. Christopher Mercer has created 5 blog entries.

Buy-Sell Agreement Trigger Events

Photo of Z Christopher MercerBuy-sell agreements are designed to accomplish one or more of the following objectives from one or more of several viewpoints: the corporation, the employee-shareholder, the non-employee shareholder, and any […]

Buy-Sell Agreement Trigger Events2018-01-13T19:46:38+00:00

Don’t Rely Upon Templates When Constructing Buy-Sell Agreements

This short article is a warning against the blind use of legal forms, or templates, for developing buy-sell agreements. Parties to each and every buy-sell agreement need to take time to agree on the key business and valuation aspects of their agreements, then have a qualified attorney (who can also be involved in reaching agreement) draw up the document. What could be simpler? All the parties have to do is to agree on the events that “trigger” the buy-sell agreement, on who buys stock, and on the pricing and terms of the purchase. Also, it is helpful if the funding for the transaction is specified, as well. The problem is, if my experience is any indication, these things are almost never agreed to at the level at which it is necessary for the shareholders to understand what will happen when their buy-sell agreements are triggered by the quitting, firing, retiring, death, disability, divorce, etc. of a shareholder.

Don’t Rely Upon Templates When Constructing Buy-Sell Agreements2018-01-13T19:46:38+00:00

Treatment of Life Insurance Proceeds in Valuation

Many buy-sell agreements are funded, in whole or in part, by life insurance on the lives of individual shareholders, who may be key managers, as well. Life insurance is a tidy solution for funding when it is available and affordable. It is important, however, to think through the implications of life insurance from a valuation perspective whether you are a business advisor, business owner, or a valuation expert. The proceeds of a life insurance policy owned by a company naturally flow to the company.

Treatment of Life Insurance Proceeds in Valuation2018-01-13T19:46:38+00:00