It is not obvious to me that this avoids the main problem with shotgun clauses, which is that they violate intuitive notions of fairness in the case where the two parties have differential access to capital.
Consider the case where two cofounders build $1 million worth of a business prior to having a falling out. One of them has $20k in his checking account and one has $500k of home equity. (While this sort of situation might strike one as uncommon if one assumes that all cofounders are peers N months out of undergrad, it is in fact quite common in the real world.) These facts are mutually known. There's a very degenerate strategy here for the richer cofounder: propose transferring 50% of the equity via either the shotgun clause or "fair buy/sell", then offer a bid of $20,001.
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It is not obvious to me that this avoids the main problem with shotgun clauses, which is that they violate intuitive notions of fairness in the case where the two parties have differential access to capital.
Consider the case where two cofounders build $1 million worth of a business prior to having a falling out. One of them has $20k in his checking account and one has $500k of home equity. (While this sort of situation might strike one as uncommon if one assumes that all cofounders are peers N months out of undergrad, it is in fact quite common in the real world.) These facts are mutually known. There's a very degenerate strategy here for the richer cofounder: propose transferring 50% of the equity via either the shotgun clause or "fair buy/sell", then offer a bid of $20,001.