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Three Common Types of Disputes Involving Business Succession Plans

Three Common Types of Disputes Involving Business Succession Plans
Hendershot Cowart, P.C.

If you are an owner, partner or shareholder of a business, you may not have plans to immediately retire, sell or move out of the business you have worked so hard to make successful. But at some point, you will retire or move on to other interests. Business succession plans can help ensure smooth transitions for the future of businesses – but they also have the potential for shareholder and partnership disputes.

Business succession plans can be lead to disputes because partly because they are so important. After all, they create a vision for the future and pave the way for new leadership and new directions. According to an article in Aspatore about business succession planning, succession planning disputes often arise in three situations.

  • In closely held companies, deadlock may occur if decision makers cannot come to an agreement on a succession plan.
  • Freeze-outs may happen if part of the ownership maneuvers to create a succession plan that excludes the interests of other stakeholders at the company and without collaborating to create the plan. According to the article, this could include actions as blunt as changing passwords to keep people from accessing key information or even locking the doors to the company.
  • Oppression cases happen when some within the company tries to force a succession plan by oppressing the rights of others at the company. This could include dilution of shareholder voting rights, for example.

An experienced lawyer can help your business create a succession plan. In the event that disputes arise, a knowledgeable business lawyer can help you focus on achieving an effective resolution that keeps the future of your business in mind.

Source: Aspatore, Family and business succession planning, 2014 edition, “Key Issues in the Business Succession Planning Arena,” John F. Kennedy, November 2013