There are two types of appraiser valuation agreement (AVA). Multiple appraisers and single appraises, while the multiple appraisers (MAVA), are the most common.
How they worked
Usually the BSA calls for a 30-60-day window for the seller and buyer to attempt to agree upon a price. Once the appraisal process is initiated, each party will select an appraiser.
The two will provide opinions of value conforming to the BSA. If their value is within 10% of each other, then the final value will be the average of the two.
If the two appraisals are more than 10%, they will agree on a third appraiser. That appraiser will:
- Provide an appraisal is anaverage in the same way the other appraisers (reconciler)
- Provide an opinion regardless of theother two conclusions.
When BSA are triggered, the corporation and seller separate and go separate ways as there is different motivations. The seller wants the highest price, the purchaser, the lowest price. A good reason why each party should reach an agreement on terms before there is a triggering event, where neither party will be as open minded as they were before a triggering event.
Even with appraisers it is possible that each side will be overseen by multiple sets of attorneys looking out for the interest of the various sides to the transaction.
Thought Processes behind multiple appraisers’ agreements:
Multiple appraisers are intended to bring reason and resolution to the valuation process. This does not always happen, because the parties have 30-60 window to get the appraisers and the evaluations completed. This is more than enough time to irritate each other and taint the process, causing in some cases, the appraisals to be compromised.
Since most multiple appraiser agreements (MAA) base the third appraisal to be an average of the former two if within 10%.