Disputes among business owners are not uncommon. Unfortunately, some conflicts are so great that the parties need to end their relationship completely, similar to that of a married couple seeking divorce. Hence, the term “business divorce.” The Texas business law attorneys at Diamond McCarthy are experienced in assisting majority and minority interest holders in business divorce situations.
When a new client retains us, one of the first things we do is an early case assessment or ECA. During an ECA, we review the business’ governing documents and other records to obtain as much information as we can about the business and our client’s interest therein. We determine what the value of the business is, what our client’s stake is worth and what our client’s rights are at the relevant time.
Often times we find that it would be favorable for our client to remain a co-owner of the business. In these situations, we do our best to assist in resolving the conflict so that the parties are able to preserve their relationship and continue to work together.
Sometimes, resolving the conflict is impossible and a business divorce is in our client’s best interest. In such cases, we have already determined what rights our client has during the ECA and go to work to enforce these rights. Many times a minority business owner must be bought out. This means that his or her interest is purchased by the company, thereby ending the business relationship. A buyout might be subject to a previously executed contract or might require further negotiation. If there is no buy sell or buyout agreement, our attorneys will represent the client in negotiation of the buyout terms and relentlessly work toward a favorable deal. If a contract exists, our attorneys will work to ensure that our client’s rights are enforced. Another way in which a minority shareholder can be bought out is via a redemption. In a redemption, the minority owner’s initial investment is returned in the form of a fixed-income security, such as preferred stock (stock that has a fixed dividend).
Unfortunately, it is sometimes impossible to resolve a conflict between business owners. In this scenario, a court must decide the terms of the business divorce. If litigation is necessary, our attorneys have the skills necessary to fight vigorously on behalf of our client to obtain a positive decision.
If you have sacrificed your blood, sweat and tears as a business owner, we understand how important it is to you to resolve a conflict that may affect your ownership. The attorneys at Diamond McCarthy regularly represent business owners in these situations and bring years of knowledge and experience to the table for every client. If you are involved in a business divorce situation, contact our Dallas, Texas office by calling (214)389-5300 for a consultation today.