Shareholder and Member Buyout Valuation Disputes in California

Last updated: November 2026

A buyout valuation dispute in California turns first on which valuation standard applies. A buy-sell agreement sets its own formula. A corporate dissolution buyout uses "fair value" measured on a liquidation basis with the going-concern possibility taken into account. (Corp. Code, § 2000, subd. (a).) An LLC dissolution buyout uses "fair market value," fixed by three court-appointed appraisers. (Corp. Code, § 17707.03, subd. (c)(1), (3).) Kolmogorov Law, P.C. litigates buyout price disputes for owners in Orange County, Los Angeles, and across California.

Call (909) 235-6116 or contact us online if the number you have been offered does not match what your interest is worth.

Three standards, three different numbers

If a shareholder or operating agreement contains a buy-sell clause, its formula controls. Book value, a multiple of earnings, an agreed appraisal process, or a fixed annual certificate are all common.

If the buyout arises from a corporate dissolution suit, the standard is fair value. That means liquidation value as of the valuation date, taking into account the possibility, if any, of selling the entire business as a going concern. (Corp. Code, § 2000, subd. (a).)

If the buyout arises from an LLC dissolution suit, the other members purchase the moving party's interest at fair market value. (Corp. Code, § 17707.03, subd. (c)(1).) The statute does not define the term further, which leaves room for argument about discounts.

For a partner leaving a general partnership, the statute values the interest as of the dissociation date. The price is what the partner would have received had the assets been sold for the greater of liquidation value or going-concern value without that partner. (Corp. Code, § 16701, subd. (b).) Interest runs from the dissociation date to payment.

Where shareholder buyout valuation fights happen

Discounts. A buyer's appraiser applies a minority discount and a marketability discount and arrives at 60 percent of a pro rata share. The seller's appraiser applies neither. Whether discounts belong in a statutory buyout depends on the standard and on the facts, and it is often the single largest issue in the case.

Normalization. The controlling owner has paid himself a salary well above market for years. A valuation on reported earnings understates the business. We adjust the earnings to what an arm's-length manager would cost.

The valuation date. In a dissolution buyout the default date is the day the action was commenced, but the court may designate another date for good cause. (Corp. Code, §§ 2000, subd. (f), 17707.03, subd. (c)(5).) A company whose value fell after filing, or rose, gives one side a strong incentive to move the date.

Offsets. In a partnership buyout, damages for wrongful dissociation and other amounts the partner owes are subtracted from the price. (Corp. Code, § 16701, subd. (c).)

The court-appointed appraisal

When the purchasing parties elect to buy, cannot agree on value, and post a bond for the moving party's expenses, the court stays the dissolution and proceeds to fix the value. (Corp. Code, §§ 2000, subd. (b), 17707.03, subd. (c)(2).) The court appoints three disinterested appraisers. Their award, or the award of a majority of them, is final and conclusive once the court confirms it. (Corp. Code, §§ 2000, subd. (c), 17707.03, subd. (c)(3).)

The court then enters a decree in the alternative: pay the price within the stated time, or the company is wound up and dissolved. (Corp. Code, §§ 2000, subd. (c), 17707.03, subd. (c)(3).) A purchaser who elects, posts the bond, and then fails to pay is liable for the moving party's expenses, including attorney fees. (Corp. Code, § 17707.03, subd. (c)(3).)

Because the appraisers' award is final once confirmed, the fight is front-loaded. The appraisers' instructions, the evidence they receive, and the valuation date are where the case is decided. The deadlock that often precedes these petitions is covered on our 50/50 deadlock page, and the corporate petition itself on our involuntary dissolution page.

The partnership buyout clock

A dissociated partner's buyout has its own timeline. If no purchase agreement is reached within 120 days after the partner's written demand for payment, the partnership must pay in cash the amount it estimates to be the buyout price. (Corp. Code, § 16701, subd. (e).) The payment must come with a statement of assets and liabilities, recent financial statements, an explanation of the calculation, and notice that it is in full satisfaction unless the partner sues within 120 days. (Corp. Code, § 16701, subd. (g).)

The partner's action to determine the price must be filed within 120 days after the partnership tenders payment, or within one year after the written demand if nothing is tendered. (Corp. Code, § 16701, subd. (i).) The court may award attorney fees and appraiser fees against a party who acted arbitrarily, vexatiously, or not in good faith, including a partnership that never tendered. (Corp. Code, § 16701, subd. (i).) Miss the 120-day window after a tender and the tendered amount becomes the price.

What we do in a valuation case

Get the records first, using the inspection rights described on our LLC books and records page. Retain a forensic accountant early, before positions harden. Litigate the valuation date where it matters. And keep a negotiated exit on the table, because a buyout agreed between the owners almost always costs less than three appraisers and a confirmation hearing. The partnership buyouts page covers that negotiation.

Where these cases are heard

Valuation proceedings are heard in the Superior Court of the county where the company has its principal office: the Central Justice Center in Santa Ana for Orange County companies, the Stanley Mosk Courthouse in Los Angeles.

What to bring to the first meeting

Any shareholder, operating, partnership, or buy-sell agreement. Five years of financial statements and tax returns if you have them. Any valuation, appraisal, or offer already exchanged. Compensation records for the owners. And the date you were dissociated, removed, or filed, since the valuation date may hinge on it.

Frequently asked questions

How is a buyout price determined in a California shareholder dispute?

By the buy-sell formula if the agreement has one. Otherwise, in a dissolution suit, by fair value on a liquidation basis adjusted for the going-concern possibility for a corporation, or fair market value for an LLC, as fixed by three court-appointed appraisers and confirmed by the court. (Corp. Code, §§ 2000, subds. (a), (c), 17707.03, subd. (c)(1), (3).)

Does a minority discount apply to my shares?

It depends on the standard and the facts. Discounts for lack of control and lack of marketability are the most contested adjustments in these cases. A buy-sell agreement may address them expressly. Under the statutory standards, the appraisers decide, which is why the evidence presented to them matters so much.

Can I challenge the appraisers' valuation?

Before confirmation, yes, through objections to the award and the evidence behind it. Once the court confirms the award of the appraisers or a majority of them, it is final and conclusive on all parties. (Corp. Code, §§ 2000, subd. (c), 17707.03, subd. (c)(3).) The time to influence the number is before the award.

How long do I have to sue over a partnership buyout price?

One hundred twenty days after the partnership tenders payment or an offer to pay, or one year after your written demand if the partnership tenders nothing. (Corp. Code, § 16701, subd. (i).) A tender accompanied by the required notice becomes full satisfaction if you let the 120 days pass. (Corp. Code, § 16701, subd. (g)(4).)

What if the buy-sell formula in our agreement is outdated?

Courts generally enforce the formula the owners agreed to, even a stale book-value formula. The arguments against enforcement are narrow: the formula was never properly adopted, the triggering event did not occur, or the other side's conduct excuses performance. Review the agreement before any triggering event if you can.

Talk to a California business valuation dispute attorney

If you are facing a buyout at a price you do not accept, call (909) 235-6116 or contact us online. Kolmogorov Law, P.C. is at 327 Magnet, Irvine, CA 92618, and represents owners in Orange County, Los Angeles, and throughout California. See also our partnership dispute attorney page and the shareholder and LLC member disputes guide.

This page provides general information about California law and is not legal advice. Outcomes depend on the agreement, the financial records, the appraisers, and the court.