New Review! From Steve Leimberg’s Business Entities Email Newsletter – #126

Steve Leimberg’s Business Entities Email Newsletter – Archive Message #126
Review authored by L. Paul Hood, Jr.

EXECUTIVE SUMMARY:
This is a review of Buy-Sell Agreements for Closely Held and Family Business Owners: How to Know Your Agreement Will Work without Triggering It (Peabody Publishing, LP 2010) by Chris Mercer.

Chris’s book is currently available from the publisher (www.buysellagreementsonline.com or 800.769.0967) and will soon be available through www.amazon.com and other book outlets.

FACTS:

This book, whose “cousin” was written for those who draft buy sell agreements, was written for those who sign buy-sell agreements. However, it’s well worth reading for those of us who draft them. I reviewed this book’s “cousin” (Buy-Sell Agreements: Ticking Time Bombs or Reasonable Solutions?) in 2007 in Business Entities Newsletter #119.

This book is comprised of three parts, including:

Part One: Why Your Buy-Sell Agreement Won’t Work

Chapter One: Your Buy-Sell Agreement Won’t Work
Chapter Two: Begin at the Beginning
Chapter Three: Business Issues & Latent Problems
Chapter Four: Business Factors to Consider
Chapter Five: The Moving Parts of Buy-Sell Agreements

Part Two: Buy-Sell Agreement Essentials

Chapter Six: Trigger Events: Those Things That Happen
Chapter Seven: Categories of Buy-Sell Agreements
Chapter Eight: Types of Buy-Sell Agreements
Chapter Nine: Fixed-Price Buy-Sell Agreements
Chapter Ten: Formula Buy-Sell Agreements
Chapter Eleven: Shotgun Agreements
Chapter Twelve: Rights of First Refusal

Part Three: Valuation Process Buy-Sell Agreements

Chapter Thirteen: Valuation Process Buy-Sell Agreements and Their Elements
Chapter Fourteen: The Defining Elements of a Valuation Process Agreement Explained
Chapter Fifteen: Treatment of Life Insurance Proceeds in Valuation
Chapter Sixteen: Multiple Appraiser Agreements
Chapter Seventeen: The Recommended Structure: Single Appraiser, Select Now and Value Now
Chapter Eighteen: Other Important Aspects of Process Buy-Sell Agreements
Chapter Nineteen: Pete and Sam Reprise
Chapter Twenty: Process-Busting Valuation Issues

The book begins with a “dialogue” between an owner of a minority interest in a closely held business, “Sam,” and a consultant, “Pete,” about Sam’s buy-sell agreement. This enlightening dialogue continues throughout the book at the beginning of each chapter, and each successive chapter imparts a valuable lesson about buy-sell agreements.

Highlights of the book include the 20 D’s of buy-sell agreements in Chapter Six and the suggestion in Chapter Five that the parties to a buy-sell agreement play out a mock triggering event under their buy-sell agreement to see if they like what happens—this is something that drafters of buy-sell agreements should do too! Readers are provided with a discount code to obtain the related Buy-Sell Agreement Checklist, which provides more than 40 pages of questions and considerations for discussion and/or drafting buy-sell agreements, for free.

COMMENT:

It’s probably no secret that I am a Chris Mercer fan; Chris and I have been friends for a long time. However, this book is without a doubt his best work, and I own all of his other books. A humorous and easy read, Chris’s experience shines through as one who has both signed buy-sell agreements, and worked with lots of them as a business appraiser. Chris sounds a clarion call to action to fix buy-sell agreements before a triggering event occurs, and I couldn’t agree more.

At $29.95, it is another “no-brainer” addition to the library. In fact, it is probably not a bad idea to buy additional copies for all clients who are going through the process of negotiating a buy-sell agreement. I strongly suggest that they go out and get—and read—this book, before it’s too late.

HOPE THIS HELPS YOU HELP OTHERS MAKE A POSITIVE DIFFERENCE!

Paul Hood
03-Nov-10

L. Paul Hood, Jr. received his J.D. from Louisiana State University Law Center in 1986 and Master of Laws in Taxation from Georgetown University Law Center in 1988. Paul is a frequent speaker, is widely quoted and his articles have appeared in a number of publications, including BNA Tax Management Memorandum, CCH Journal of Practical Estate Planning, Estate Planning, Valuation Strategies, Digest of Federal Tax Articles, Loyola Law Review, Louisiana Bar Journal, Tax Ideas and Charitable Gift Planning News. Presently, He has spoken at programs sponsored by a number of law schools, including Duke, Georgetown, NYU, Tulane, Loyola (N.O.) and LSU, as well as many other professional organizations, including AICPA and NACVA. From 1996-2004, Paul served on the Louisiana Board of Tax Appeals, a three member board that has jurisdiction over all Louisiana state tax matters.

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LISI Business Entities Newsletter #126 (November 3, 2010) at www.leimbergservices.com.  Copyright 2010 Leimberg Information Services, Inc. (LISI).