Business Valuation for Buy-Sell Agreements: Keep Coverage Aligned With Reality
How to set valuation methods in buy-sell agreements and keep life insurance funding synchronized as business value changes.
Valuation Approaches
- Fixed-price models are simple but go stale fast.
- Formula and appraisal-based methods adapt better but require governance discipline.
Why Updates Fail
- Annual valuation meetings get skipped when operations are busy.
- No one owns the process, so policy amounts lag value growth.
Operating Standard
- Set mandatory review dates, document signoff owners, and tie updates to policy audits.
- If valuation changes materially, adjust funding immediately.
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