A Buy-Sell Clause Neither Partner Had Read Closely

The situation

The letter arrived on a Tuesday, on the letterhead of the company Kittipong had spent nine years building. It informed him, in three short paragraphs, that his co-owner Baruch was exercising a buy-sell provision in their shareholder agreement and that an independent valuator would be appointed within thirty days to set the price of Kittipong's shares.

Kittipong had trained as a registered nurse before switching careers, buying into a small electrical contracting business in Kitchener alongside Baruch, an electrician who ran the technical side of the operation while Kittipong managed scheduling, billing, and client relationships. The two had split ownership fifty-fifty from the start, on the strength of a friendship and a handshake understanding that neither of them, six years later, could fully recall in the same terms. Revenue had grown steadily to the point where the company was doing residential and light commercial work worth several hundred thousand dollars a year, and the value of each half-share sat somewhere in the low hundreds of thousands, though nobody had put a firm number on it before the letter arrived.

The relationship had frayed over the previous year, mostly over disagreements about hiring and whether to take on larger commercial contracts, but Kittipong had assumed, wrongly, that a disagreement about direction was something the two of them would eventually talk through. Instead Baruch had gone to a lawyer, reviewed the shareholder agreement they had both signed at the outset, and found a buy-sell clause that let either owner force the other to sell, at a price set by a valuation process that moved quickly once triggered.

Kittipong's English was serviceable for day-to-day business but not for reading dense legal and accounting language under time pressure, and the thirty-day clock in the letter meant every misunderstood term risked becoming a missed step. His wife, Pensri, was the one who first noticed how quickly the language in the letter shifted from familiar business terms into something closer to a formal notice, and she pushed him to get advice immediately rather than trying to work through it himself or waiting to see what Baruch said next. He came to our office with the letter, the shareholder agreement, and a genuine fear that he was about to lose his half of a business he had built, for a fraction of what it was worth, because he could not follow the process fast enough to object to it properly.

Pensri sat in on the first meeting, not because she had any ownership stake in the company but because she understood, better than Kittipong did in the moment, how much was riding on getting the first few steps right. Her presence turned out to matter more than either of them expected, since it was her insistence on a second, independent read of the letter that surfaced just how little time the thirty-day clock actually left once translation and review were factored in.

What the review found

The shareholder agreement's buy-sell clause was valid and enforceable. Buy-sell provisions of this kind are common in closely held Ontario corporations precisely because they give co-owners a way out of a deadlock without going to court, and courts generally respect them as written, provided the process set out in the agreement is actually followed. Kittipong could not simply refuse the buyout because he disagreed with the timing or the reason behind it, and no amount of goodwill between him and Baruch, however strained by then, would change that basic starting point.

The problem was not the clause itself but how it was being carried out. The agreement called for an independent valuator agreed on by both parties, or, failing agreement, one appointed through a specified process. Baruch's lawyer had proposed a valuator on a tight timeline and treated Kittipong's silence, in the days after the letter arrived, as acceptance, when in fact Kittipong had simply not yet had the letter properly translated and explained to him. That gap mattered, because once a valuator is appointed and begins work, unwinding the choice becomes harder, and the valuation itself, once delivered, is often treated by the agreement's own terms as final or close to it, leaving very little room to reopen a flawed process after the fact.

A closer read of the agreement also showed that the valuation was meant to be based on the company's fair market value using a defined method, factoring in accounts receivable, equipment, and existing contracts, not simply a multiple of the previous year's revenue, which is what the proposed valuator's initial engagement letter suggested he intended to use. That was a meaningfully different, and lower, approach for a contracting business with substantial receivables and a full pipeline of signed jobs, since a revenue multiple ignores exactly the kind of forward-looking work a growing electrical contracting business tends to be carrying at any given moment.

There was also a question of timing. The company's largest commercial contract to date, awarded only weeks before the letter arrived, had not yet been reflected in any financial statement Baruch's side had provided to the proposed valuator. Whether that contract belonged in the valuation at all, and how, was a live and material dispute, not a technicality, and it needed to be raised before the valuator's methodology was locked in rather than after, since a valuator working from stale financials has no way of knowing a major new contract even exists unless someone puts it in front of them.

Underneath all of this sat a harder truth Kittipong had to absorb: nothing in the agreement gave him a path to stop the buyout outright. His only real influence over the outcome was in shaping how fairly and accurately the price got calculated, which meant the review had to move quickly, target the specific weaknesses in the process as proposed, and avoid getting drawn into a broader argument about whether the buyout was fair to trigger in the first place, a fight the contract had already settled in Baruch's favour.

What we did

1. Arranged qualified interpretation for every substantive discussion, rather than relying on informal translation from Pensri or another family member. A relative doing their best in the moment is not the same as a qualified interpreter working from precise legal and financial vocabulary, and we needed Kittipong's instructions to hold up later without anyone being able to argue his decisions rested on a misunderstood word or an approximated figure.
2. Requested, and obtained, a short extension of the response deadline on the basis that Kittipong had not been given a fair opportunity to review the letter in a language he fully understood. That extra time was not a delay tactic; it was the minimum needed to review the shareholder agreement properly before any valuator was locked in and before Baruch's proposed process hardened into an accepted default nobody had actually agreed to.
3. Reviewed the shareholder agreement's valuation methodology clause line by line, comparing its actual wording against the approach the proposed valuator had outlined in his engagement letter. That comparison surfaced a real gap: a revenue-multiple shortcut would likely produce a materially lower figure than the fair-market-value method the agreement itself called for, and that gap was large enough to change the final price by a significant margin.
4. Objected in writing to the proposed valuator's stated methodology, setting out precisely where the engagement letter departed from what the agreement required. We asked for the scope of the valuation to be corrected before any work began, because challenging a finished report after the fact would have meant arguing over a number that already looked final to everyone involved, including the valuator himself.
5. Raised the unreflected commercial contract directly with the valuator and opposing counsel, providing the signed contract and supporting documentation so it would be included in the pipeline value considered as part of the company's worth. Leaving it out would have understated the business at exactly the moment its value was being fixed for good, at Kittipong's direct expense.
6. Negotiated a jointly agreed set of instructions to the valuator covering methodology, the valuation date, and which contracts and receivables fell within scope. Putting this in writing closed off the ambiguity that had let the process start on unfavourable terms, and gave both sides, and the valuator, a shared baseline that neither could later reinterpret in their own favour.
7. Kept Kittipong briefed in plain, interpreted language at each stage, translating not just the documents themselves but what each procedural step actually meant for his eventual payout. Every decision he made, including agreeing to the final instructions given to the valuator, was made with a full and accurate understanding of the trade-offs, not a rushed summary he was trusting us to have gotten right.
8. Reviewed the completed valuation report against those agreed instructions once it was delivered, checking it line by line for consistency with what had actually been asked for. That review flagged one remaining discrepancy in how equipment depreciation had been calculated, which was corrected before the figure was treated as final and before either side committed to closing the transaction.

The outcome

The buyout proceeded. Kittipong sold his half of the company to Baruch at a price set through the corrected valuation process, and the partnership, strained well before the letter ever arrived, ended in a transaction rather than a lawsuit. The final figure landed in the middle of the dispute range, meaningfully higher than the revenue-multiple shortcut would have produced but still below what Kittipong believed, and continued to believe, his half was genuinely worth once the new commercial contract was fully weighed.

This was not a case where the process could be stopped or the underlying disagreement between the two owners repaired. The buy-sell clause did what it was written to do, and once Baruch chose to trigger it, Kittipong's only real leverage was making sure the mechanics of that process were followed correctly and that nothing was decided while he was operating with an incomplete understanding of what was being asked of him.

Kittipong left the company with proceeds that reflected a fair application of the agreement's own valuation formula rather than a rushed shortcut, and with a clear written record of why each figure in the final number was what it was. It was a loss of the business he had helped build, and he said so plainly at the end of the file, but it was a contained loss rather than the larger one a faster, less scrutinized process would likely have produced.

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