By: David Kay
What can you as a business owner do to protect your business or maximize its value if you lack the voting power to control the business? Entrepreneurs enter into 50/50 ownership situations, or worse, for a variety of reasons and with the best of intentions. Over time, one owner may prove to be more energetic, visionary, and successful, but may lack decision-making power on issues like fair pay or taking risks to grow the business. Disagreements on these and other fundamental issues can put in danger the very existence of a now successful business.
The first step for you as an owner is to assess your leverage. Do customers or employees owe their loyalty and respect mostly to you or to the other owner? Are you free of non-compete obligations if you decide to pursue an orderly end to your own involvement? Does the business owe you more money? Do you personally own intellectual property that the business needs to carry on? Positive answers to these and other questions may give you more power than you realize to negotiate a solution. Even if the answers are negative, understanding each party’s leverage will help frame your approach for the ensuing negotiations.
Read the article in full at, "Power Trip: How to Resolve Power Abuse in a 50/50 Business Partnership."
David Kay is a corporate attorney who advises businesses and individuals regarding
business transactions from startup to sale. For more information on developing
partnership or shareholder agreements or resolving owner disputes, contact David
at dekay@lerchearly.com (301) 657-0724.
This article originally appeared in the Lerch Early Legal Update. To subscribe, visit http://www.lerchearly.com/publications/7.
