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Curious how buyout provisions are usually priced - seem like several options to me but none seem optimal:

1. Based on some predefined amount 2. Based on some metric like revenue of the company, number of customers 3. FROR from an outside offer

Any other suggestions for methods?

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You can base it on anything you want that seems fair to both of you. Sometimes in a company that is a good size but is not public, you might want to require a third party to evaluate the value of the company, and set forth a timeframe for the buyer to come up with the cash or note to buy the shares with. In a smaller company your CPA can probably come up with a value for you.

One thing to think about is what serves you now may not serve you in 2 years. If that is the case you can change the wording to suit the circumstances better when you need to. Talk to your attorney and ask what seems best based on your situation now.

One reason a buyout clause is smart, is that corporate shares are considered the same as money by a divorce court and can be assigned by the judge to the person's ex spouse. Meaning you could have a hostile, non-contributing person on your board. So be sure to talk to your attorney about that.

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