In a recent case decided by the Wisconsin Supreme Court, it was determined that a buy and sell agreement that set price at "book value" was unenforcible because the term "book value" is vague.
The case of Ehlinger v. Hauser, 2010 WI 54, filed June 25, 2010, is a bit difficult to analyze, since
only six justices participated, and not more than four agreed upon any one point. The key point from a shareholder’s standpoint is this: if your buy and sell agreement sets price using the term "book value," you should be sure that term defines what assets and liabilities are included when making the computation. A simple distinction would be this: you have to say whether book value is that which is calculated by the company’s accountants on a regular basis using the methods consistently applied in calculating such statements, or whether this will be some other analysis, such as taking historically created "cash basis" statements and converting them to "accrual."
The point here is this: be sure your buy and sell agreement can be carried out by simply following the directions therein, which are clearly defined.