Family Business Partner Buyout: Valuation + Structure

The situation

The original founder's children disagreed on the value of buying out one sibling who wanted to exit. The exiting sibling's attorney had quoted $6.1M based on an industry multiplier; the operating siblings believed it was worth closer to $3.5M based on the distress of a recession-impacted year. Without a defensible valuation, the buyout was heading toward litigation.

What we did

We delivered an independent valuation using both income (capitalized cash flow) and market (transaction comparables) approaches, with appropriate discounts for lack of marketability and lack of control on the minority interest being sold. We also reviewed and amended the buy-sell agreement to prevent future disputes and structured the transaction to optimize tax treatment for both sides.

• Business valuation report (income + market approaches)
• Buy-sell agreement review and amendment
• Estate and gift tax planning around the buyout
• Transition planning for ongoing operations
• Personal tax structuring for both sides

The outcome

Independent valuation came in at $4.2M. The exiting sibling accepted the figure based on the methodology documentation. The transaction closed without litigation. The family relationship survived. Buy-sell agreement updated with a clear valuation framework for future events.