Business negotiations can be risky and volatile. It can often be hard to predict whether a particular move will result in success or failure for a business, or land somewhere in between. One of the most difficult aspects of a business involves starting a business, when the groundwork is laid for a successful future or a rocky road full of conflicts. When there are problems in the initial business formation or a business partnership breaks down, the results can be very troubling, as a Louisiana man has recently discovered.
In Louisiana, three brothers were equal owners of the business Audio Visual Mart for a period of several years. At some point, one of the brothers acquired the ownership interest of another brother, which made him controlling shareholder. As a result of this transition of power, the brother with the 2/3 ownership interest allegedly attempted to oust the remaining brother from the business by changing the locks, preventing him from coming onto the business’s premises, refusing to pay him the salary due, terminating his employment, and removing him as president. As a result of these dramatic changes, the excluded brother is suing the controlling brother for mismanagement, gross negligence, and derogation of duty, among other claims.
Ownership is a key aspect of a business and many people may choose to create a partnership as a way to avoid dealing with the stressors of starting and running a business alone. Partnerships can be a great way to structure a business entity, but they also have their share of problems. If disputes arise between the partners and the disagreements become irrevocable, the future of the business can be threatened.
Although no one can predict the future and even the most wisely-structured business may run into trouble, careful planning and negotiations from the outset, at the business formation stage, can help prevent some of the more common problems that could potentially arise. Business attorneys are experienced in foreseeing these kinds of conflicts and problematic situations and can advise their business owner clients on the best ways to proceed to give their businesses the greatest shot at success.
Source: Louisiana Record, “Man sues brother for alleged illegal takeover of family business,” Kyle Barnett, May 24, 2013