Dutch Auction

When valuation of a family business or a piece of real property (or for that matter for any valuable asset) for your inventory is both illusive and controversial, I sometimes suggest what my Daddy used to call (my apologies to our brothers and sisters from the Netherlands) a “Dutch auction.” Both sides cooperate with each other to allow each other to gather all the relevant information they wish about the value of the property.

On or before an appointed date, they each submit a sealed bid for a cash price to a trusted third party. The high bidder becomes the “buyer” at the price the high bidder submitted, and the low bidder becomes the “seller.”

What this means in mediation or negotiations, of course, is that the “buyer” will be deemed to have been “awarded” the property. The inference (which is itself negotiable) is that the “buyer” will end up compensating the “seller” for the value of the disputed property by means of an adjustment in the division of other property.

If the Dutch auction is to work well, you will need to agree before you submit bids on some kind of payment schedule with which either of you can comply. There’s nothing to prevent your agreeing, for example, that your “bid” will be a series of payments over time, not a lump sum cash payment up front.

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