Drafting Drag along Triggers in International Shareholders Agreements
Drafting cross-border drag-along triggers requires verifiable voting thresholds, explicit cash valuation floors, and deeded power-of-attorney execution clamp mechanics.
Expert Valuation Protocol
Meaning
Procedural framework established in a contract to resolve disagreements about the value of an asset through an independent specialist. The expert valuation protocol defines how the appraiser is chosen and the rules they must follow to reach a final and binding decision.
Expert Finality
Both parties agree in advance that the determination made by the expert will be final and cannot be appealed except in cases of fraud or obvious mathematical error. This prevents lengthy court battles over the price of a business and allows the transaction to close on a set timeline.
Selection Logic
The agreement specifies the qualifications required for the expert and the process for appointing them if the parties cannot agree on a name. Typically, the president of a professional accounting body or a specialized valuation institute is asked to nominate a neutral third party with experience in the relevant industry. This ensures that the appraiser has the technical knowledge to evaluate the specific assets without any bias toward the buyer or the seller.
The selected expert must disclose any previous relationships with the parties to ensure their independence is maintained throughout the process.
Procedural Step
The expert receives written submissions from both sides and has the power to request additional financial data or site visits. They act as an expert and not as an arbitrator, which means they use their own judgement rather than just choosing between the figures provided.