Business Divorce: Understanding Its Dynamics and Formulating Solutions

Business Divorce: Understanding Its Dynamics and Formulating Solutions

by Stephen H. Knee

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Product Details

ISBN-13: 9781627228640
Publisher: American Bar Association
Publication date: 11/07/2015
Pages: 109
Product dimensions: 5.90(w) x 8.70(h) x 0.40(d)

About the Author

Stephen H. Knee is of counsel to the Corporate Department and a member of the Dispute Resolution and Banking, Business Financing & Creditors’ Rights Practice Groups at the Roseland, New Jersey law firm of Greenbaum, Rowe, Smith and Davis LLP and has represented corporations, partnerships, limited partnerships, limited liability companies, and other business entities in all forms of business matters for over 48 years. He is an adjunct professor at Seton Hall University School of Law, where he teaches a course in business acquisitions. Mr. Knee is the author of the chapter in the New Jersey Practice Series entitled "Buying and Selling Businesses" (West Publishing, 1996).

Table of Contents

Preface ix

About the Authors xi

Acknowledgments xv

Introduction xvii

Chapter 1 Typical Fact Patterns Stephen H. Knee, Esq. 1

Chapter 2 An Ounce of Prevention Is Worth a Pound of Cure Stephen H. Knee 5

Buy-Sell Agreement 5

Governance 6

Corporations 6

Limited Liability Companies and Partnerships 6

Dispute Resolution Provisions 7

Buy-Sell Provisions 7

Triggering Events 8

Other Provisions 11

Tax Considerations 11

Chapter 3 Psychological Dynamics of Closely Held Businesses: Impact of Partnership and Family-Owned Business Divorce Dr. Jane M. Sullivan 15

Perspectives on Partnerships 15

Coming Together: Business Partners 17

Staying Together: Maintaining the Partnership 20

When Staying Together Is Painful: Coming Apart 24

Termination/Disengagement/Divorce 28

The Real Issues 32

Meaning of the Relationship 33

Duration: Nature of the Conflict 33

Irreconcilable Differences 34

Influence of Advisors 34

Ultimate Goal 35

Multiple Partnerships 36

Perspectives on Family Businesses 36

Definition of Family 37

Families in Business 40

Special Dynamics 42

Economic Interdependence 42

Multiple Perspectives 43

Childhood Histories 45

Sibling Relationships 45

In-Laws 47

Ethnicity 48

Outside Family Members 50

Complexity 51

Sources of Conflict 51

The Conflict Process 55

Succession as a Special Issue 55

Coming Apart 57

The Divorce 57

Causes of Divorce 58

The Divorce Process 59

Methods of Resolution 62

Indirect Methods of Resolution 62

Direct Methods of Resolution 63

Prevention/Intervention Strategies 64

A Written Agreement 64

Board of Advisors/Board of Directors 65

Family Council 66

Mentoring of Sibling Teams 67

Conclusion 68

Additional Resources 68

Chapter 4 Assembling the Professional Team Stephen H. Knee 71

Attorney 72

Accountant 72

Investment Banker 72

Psychologist or Business Advisor 73

Other Professionals 73

Chapter 5 Ethical Considerations Stephen H. Knee 75

Who Is the Client? 75

Chapter 6 Legal and Other Issues to Be Resolved Stephen H. Knee 77

Existing Obligations 77

Selling Owners' Benefits 79

Claims and Litigation 79

Dissenters' Rights 80

Other Considerations 81

Additional Resources 82

Chapter 7 Tax Issues Kenneth G. Hydock 83

Additional Resource 85

Chapter 8 Valuation Bruce Bingham 87

Approaches to Value and Key Drivers 90

Income Approach 90

Market Approach 92

Cost Approach 94

What Can Be Done? 95

Value in a Non-Litigated or Non-Arbitrated Divorce 95

Chapter 9 Methods of Resolution Stephen H. Knee 99

ADR 99

Mediation 100

Arbitration 100

Advantages and Disadvantages 101

Litigation 103

Index 105

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