Determination of fair market value (optional clause)

Determination of fair market value (optional clause)

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This document is a clause which can be inserted into a sale of business agreement.

In transactions pertaining to sale of shares, the parties to the transaction agree that the purchase price for the shares will be the fair market value of those shares.

If the purchase price is to be determined in this manner, then it is important to include a schedule to the agreement which sets out the process for determining the fair market value of the shares, whether by agreement or by an independent expert.

Using this document

This document clause can be used in a business sale agreement. It can also be inserted into the separate document “Business sale agreement – sale of shares (short form)” as a new schedule.

When inserting this optional clause into an agreement, care must be taken to ensure that the agreement remains consistent. Cross-references, definitions and schedules should all be checked.

This document has been authored for LexisNexis by Elise Margow, Principal, Legally Speaking.

This document is prepared with the assistance of Specialist Editor Murray Landis, Partner, K&L Gates.