The experts at Briol & Benson discuss one of the biggest tripwires in family businesses-the transition of leadership from one generation to another. Scott Benson references one such case where despite the founder's well structured exit, things still fell apart.
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From the Divided Dynasties Family Business Podcast:
Join seasoned family business dispute attorneys Mark Briol & Scott Benson as they explore the intricacies of family business conflicts, providing tips for family businesses in transition. Each episode they dive into the unique challenges and conflicts that arise within family-run companies.
This episode on Divided Dynasties, Mark Briol and Scott Benson discuss how family business members can establish parameters for orderly succession and how to effectively broach the prospect of leadership change with a company founder. Plus, they explain how a legal team can even the playing field for minority shareholders navigating the treacherous waters of power transfer.
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For more information and resources, visit our website at briollaw.com.
📞 Need help navigating your family business problem? Contact Briol & Benson at 612-756-7777 or email us at Podcast@briollaw.com
🔎 Key Insights:
🥊 Delve into why leadership transitions frequently become the catalyst for lawsuits in family businesses, unraveling deep-seated sibling rivalries.
📄 Explore a real case where a founder's well-intentioned plan for passing on the company led to unexpected power struggles and legal battles among siblings.
⚖️ Understand how unequal distribution of voting shares can influence the dynamics, as the CEO strategically stacks the board to force out less-involved siblings.
Transcript:
Pat Milan: One of the biggest trip wires, I think, that literally can blow up a family business, I wonder if you agree: the transition of leadership from one generation to another is a big trip wire. Do you agree?
Scott Benson: I do. I think a lot of times, that's what will cause the lawsuit that we eventually get. And it's a time when all of the sibling rivalry probably comes to play. And sometimes the best laid plans for the founder of a company just don't play out the way he thought. We had a case where the founder, the father, wanted to pass the company on. And he actually I think, had his kids placed in the spots they really belonged in. The one with the most business acumen was the CEO. And the father passed along to him more voting stock than the other kids got. And our client was in the field and the operations of the business. Two of the kids were not involved in the business at all, really didn't have an interest in the business. And then the fifth one was the marketing person for the company. And so it was interesting that the CEO of the company, because he had more voting shares, really was stacking the board in his favor, with a goal towards, what we found in the end, really forcing his siblings out. He forced the two out who weren't involved in the business, probably for less than what they ought to have received. Had they hired us, I think they would have gotten more for their shares, and then went after our client. And in the end, I think the father, the founder of the company, really regretted having set up the company the way he did. In fact, he told us he wished he had retained the voting shares of the company so that this didn't happen.
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