Owners of family-owned businesses sometimes enter into agreements between each other for the purchase and sale of shares in the business.  Ideally, these agreements are negotiated, documented and implemented in a way that each party is satisfied with the result – e.g., one owner acquires additional shares while the other owner receives the agreed-to cash value for the shares and exits the business.  But sometimes one party (often the seller) will claim that the deal was not fair, that he or she did not in fact receive the full value of the shares or that the agreement should be voided due to “economic duress.” Continue Reading Watch Out For Claims Of Economic Duress After Purchasing Shares In A Family-Owned Business

Many family businesses run smoothly for years, until the business is sold or passed on to the next generation(s).  There are, however, those circumstances where the family or closely-held business runs into a deadlock among management where the parties are unable to agree on a course of action to move the business forward.  In these circumstances, one party can petition the appropriate court for a judicial dissolution of the business.  The other party may be opposed to this prospect, but can do little other than defend the claim or try to work out a solution with the party filing suit.  Owners of family or closely-held businesses should be familiar with the applicable judicial dissolution standards  and should try to include language in a shareholder agreement or operating agreement to avoid this problem, especially where management and stockholdings are divided 50/50.  An ongoing deadlock can be severely damaging to a business, taking time, attention and funding away from other matters. Continue Reading Family Business Owners Should Be Aware Of Statutory “Deadlock” Provisions