The vast majority of the personal wealth of most business owners is the value of their business. Getting access to that trapped wealth in the owner’s business is a principal goal of a successful access plan. Business owners without an exit plan may never realize the potential value of their…
Valuing a business on an ongoing basis is intended to avoid valuation disputes in litigation and provide fairness and predictability. Courts enforce contractual language that establish the the value of a closely held business based on valuation reports conducted by the owners for non-litigation purposes. Courts are likely to view…
The fiduciary duties of loyalty and care may be different when a partnership is involved, rather than a corporation. The duties that shareholders in a corporation owe to each other are different than those owed in a partnership. Shareholders have more discretion to consider their own interests first. Understanding the…
Agreements that limit former employees from soliciting customers or disclosing confidential information are critical to protecting the value of a closely held business. Restrictive covenants and non-compete agreements are difficult to enforce and must be carefully drafted to assure that they are enforceable. …
A business divorce is the process by which the owners of a business separate their business interests. The process involves negotiation and may also require litigation. These cases can be divided into four phases: the emergent phase, the examination phase, the valuation phase and the resolution phase. Most owner lawsuits…
An arbitration award entered in a dispute between two parties over the alleged issuance of shares in a financing transaction was vacated by a court because of the arbitrator’s failure to issue the written award on time. In the Matter of the Application to…
In a business divorce case alleging the fraudulent acquisition of shares, once the defendant established the existence of a release, plaintiff must prove it is invalid. A claim of a fiduciary relationship does not relieve plaintiff of proving that he did not release a claim that he was the victim…
An ordinary contract, even between close friends, does not create a fiduciary relationship from which a court will find an equity interest. Dominic Thomas Karipaparambil, Plaintiff-Appellant, v Robert Michael Polus et al., Defendants-Respondents. Judgment, Supreme Court, New York County (Jennifer G. Schecter, J.), entered March 10, 2021, dismissing…
Although a former executive was bound by a restrictive covenant, the fact that his duties after joining a competitor were directed to a different market made the scope of the restrictions unreasonable. A restrictive covenant that is not narrowly tailored to protecting specific interests of the former employer at stake…
Owners of a closely held business, be it a corporation, limited liability company or partnership, may enter into contracts that are triggered when the principals have become deadlocked. Anti-deadlock provisions may provide for the appointment of an independent director, for alternative dispute resolution, or for the compelled sale of an…