Efficient partnership dissolution under buy‐sell clauses

Maria-Angeles de Frutos and Thomas Kittsteiner

RAND Journal of Economics, 2008, vol. 39, issue 1, 184-198

Abstract: Buy‐sell clauses are commonly used contractual provisions to determine the terms of dissolution of partnerships. Under them, one party offers a price for the partnership and the other party chooses whether to sell her share or buy her partner's share at this price. We point out that the selection of the proposing partner is essential for the performance of the clause. Moreover, if partners negotiate for the advantage of being the chooser, then buy‐sell clauses result in an ex post efficient outcome. Such endogenous selection is consistent with how buy‐sell clauses are drafted in practice.

Date: 2008
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https://doi.org/10.1111/j.1756-2171.2008.00009.x

Related works:
Working Paper: Efficient partnership dissolution under buy-sell clauses (2006)
Working Paper: Efficient Partnership Dissolution under Buy/Sell Clauses (2004)
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