On Tuesday, October 19, Jason Levine and Andrew Erdlen presented “Preparing for a Transitional Event in a Closely-Held Company:  What if the Owners Disagree?” Here are five takeaways from the presentation, which focused on disputes that arise when business owners sell or transfer their interests in the company:

1. Plan ahead. Clear drafting in shareholder agreements establishes the parties’ rights, duties, and obligations with greater certainty. Don’t wait to address the hard issues.

2. Memorialize discussions. Before a dispute bubbles to the surface, build a record by memorializing discussions with owners and other key parties.

3. Engage professionals. Do this earlier than you think you might need to – appraisers, accountants, and lawyers will help an owner understand the value of their interest and protect their rights.

4. Negotiate. Give negotiation a good faith try, and failing that, consider agreeing to Alternative Dispute Resolution to avoid the costs and public nature of litigation.  An amicable resolution often saves money in the end.

5. Know your rights, responsibilities and claims. If there is misconduct by an owner arising from a transitional event or severe harm due to deadlock, understand your legal rights and options and be prepared to aggressively enforce them in court as necessary.

An owner will be better positioned at the bargaining table if they keep these takeaways in mind!

If you have specific questions about transition planning topics, please feel free to reach out to Jason or Andrew.

Learn more about the presentation