Chapter 4: DEALING WITH POWER STRUGGLES AND PROTECTING MINORITY SHAREHOLDERS
This chapter discusses power struggles, squeezeouts, and deadlocks in family-owned businesses, the adviser's role in resolving them, as well as techniques to protect minority shareholders. The chapter details the reasons for power struggles including both family and business reasons. The chapter discusses how minority interests are created and why difficulties frequently arise in the operation of a family business. It also discusses squeezeout techniques used by majority shareholders who enjoy control of the business against the minority shareholders to force a buy-out of their shares. The chapter also includes a detailed discussion of how different types of stock and bylaw restrictions can be used to protect minority shareholders in a family business. Finally, the chapter discusses the consequences of, and remedies for, shareholder deadlocks. Although the discussion in this chapter focuses on shareholders and corporations, the same problems and solutions will work for businesses organized as partnerships or limited liability companies.
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