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Why You Shouldn’t Have a Formula in Your Buy-Sell Agreement

by Kelly Noll

In many buy-sell agreements, the buyout clause for shares of privately-held stock is determined by a valuation formula, such as “shares will be purchased at a 4 or 5 times multiple of the company’s most recent year EBITDA (earnings before interest, taxes, depreciation, and amortization) as defined by GAAP (generally accepted accounting principles) upon death, […]

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