50 Common Causes of Family Business Conflict ... and how to deal with them

Audio No 40. Buying & Selling Interests In The Business

• Conflict occurs when family members feel locked into holding ownership in a family business against their wishes - they would prefer to sell / exit - and there’s no agreed mechanism for doing so.

• Conflicts also occur when family members can’t stitch up acceptable deals for trading their respective interests in the business.

• Conflict arises when some family members regard themselves as owners, and want to act as such, while others see themselves as stewards, and want to act as such.

Solution

• Does the family have a mechanism for buying and selling interests in the family business? Possible? Partly possible? Acceptable?

• If not, and it could happen, develop a formula and process when things are calm. Put it into a shareholder agreement, family constitution etc.

• Is it workable at this point in time Eg: money available, value & valuation formulas etc.

• Hold a Family meeting to discuss individual needs re ownership of the business.

• Negotiate / develop an acceptable basis for a deal (use a mediator if necessary).

• Do the deal, or agree to at a pre-determined time in the future.

I'm interested in your comments below.

#succession #business #conflict