May 9, 2012
Legend Has It...
In the movies, we see it time and time again--the slick Wall
Street villain committing the hostile corporate takeover of a do-good company,
placing a closely-held family-owned business at risk of dissolution. More often
than not, this drama plays out during a high-stakes boardroom showdown, where gasps
are heard, tears are shed, and insults are hurled. Fortunately, however, the nefarious
villain is usually outwitted in the last act, the business is saved, and peace
is once again restored.
In reality, however, good doesn’t always triumph over evil. And
more importantly: real life corporate takeovers are often preventable by thoughtfully-constructed
Shareholder Agreements aimed at protecting family businesses from invasive outside
forces. Shareholder Agreements can stipulate many different rules in service to
this mission. Requiring stockholders to occupy seats at the boardroom table in
order to facilitate unified plans for a company’s goals, is one such proviso. Articulating
restrictions on stock transfer--replete with reasonable exceptions to these
limitations, is another prudent bylaw. In fact, there are seemingly endless methods
of securing a company’s long-term stability. But don’t just take The
Practitioner’s word for it…
This week’s co-guest article contributors, Daniel Crosby and N. Todd Angkatavanich, know a thing or two about
protecting family businesses from slipping into the wrong hands. One of their
helpful hints that resonated loudest with The Practitioner was their suggestion
to print all stock transfer restrictions in easy-to-read legends, on the back of
each and every stock certificate, in order to discourage the unlawful
selling of shares. After all, obliterating the threat of complicated legal
entanglements is The Practitioner’s modus operandi!
Of course, the suggestions so far mentioned barely scratch the surface. Read
this week’s companion article for more detailed wisdom, and let me know what
you think. And as always: don’t hesitate to send ideas for future blog entries and
articles. Because when it comes to strengthening family enterprises, there is
no such thing as too much inspiration!
About the Contributors:
N. Todd Angkatavanich is a partner at Withers Bergman, LLP.
authored numerous articles in publications such as Trusts & Estates,
Estate Planning, ACTEC Journal, BNA/Tax Management Estates, Gifts and Trusts
Journal, Private Wealth, Private Asset Management and other
Daniel Crosby was formerly Special Counsel at Withers
Bergman LLP. He is currently an Associate in the corporate department at
Dewey & LeBoeuf where he advises clients on mergers and acquisitions,
private equity and corporate law matters.
Be sure to look for The Practitioner: Wednesday Edition
next week in your email or online, when we feature our next guest article: "Marketing Your Family Business Consultancy Through the CPA Portal"
by Lance Woodbury.
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Yours in Practice,
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