Majority Shareholder Splitting From a Business Partner

Answer:

As a knowledgeable Delaware County Business Attorney, I get questions all the time from clients about majority shareholder wanting to break up with their business partner. If I’m the majority owner of a company, I have control and control is key. It means that I have voting privileges either by way of a stock corporation agreement, a membership agreement, or a partnership agreement previously agreed with my other partner.

The established agreement determines the way we’re going to run the company. This is often done by the majority vote. It can be set up by corporation officers and directors. The individual who controls the majority controls the future of the company.

If there’s an agreement in place, the individual who has control can implement the agreement and say, “ I have XYZ percentage of control and you do not. We’ve decided that now that your shares are going to be valued and you’re going to be exiting from the company.”

When this happens, the issue becomes, “How do I value the shares and then move into the valuation process?”

This could be by the way of the agreement we’ve entered into during the course of the year, or it could be by a third party appraisal, either through the value of the company by an appraiser agreement or some other formula that’s set forth in our agreements.

This educational blog was brought to you by experienced Business Lawyer Walter J. Timby. Our law firm proudly represents clients throughout Delaware County, as well as Pennsylvania, the greater Philadelphia area, Delaware and New Jersey.

If you have any questions about majority shareholders breaking up with business partners, please contact our Delaware County Business Attorneys for a free case evaluation. Let our skills work for you.