“shotgun” provision

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