Legal precautions must be taken when family and business collide
On Behalf of Palmer Lehman Sandberg, PLLC | Feb 27, 2015 | Business Formation And Planning |
Individuals across Dallas have considered their options for starting a business. Many people are motivated to be their own boss, be in charge of their own future and sell or make something they are passionate about.
Starting a business is no easy task, however. It can take a lot of time and there can be several obstacles along the way. In many cases, business owners will need to reach out and seek support from family members and loved ones. Whether this support is emotional, financial or professional, it can make the difference between the success and failure of a business. However, it can also change the way a business is formed and what will happen to that business in the future.
For example, a woman in another state made the decision to start a brewing distribution company in 1985. Over the years, the business struggled significantly. However, the woman received several investments from her cousin which ultimately allowed her to keep the business going. The cousin eventually became a shareholder.
Over time, the company grew to be quite a success and in 2006, the woman received an offer and decided to sell the company.
The problem with this, however, was that she never consulted her cousin prior to her decision who, it was determined, still had a legal stake in the company and all business decisions. The cousin filed a lawsuit and a federal judge ruled that the woman owed her cousin $1 million.
Business planning and disputes can be difficult and upsetting enough without also having to bring family into the mix. In order to try and avoid the potential for these difficult situations, it can be wise for business owners, investors and partners to have a clear understanding of their rights and restrictions early on. Working through the process of forming a business or changing the business structure with the guidance and knowledge of an attorney can prove to be crucial.
Source: Cincinnati.com, "Beer business dispute ends in $1M ruling," Amanda Van Benschoten, Feb. 7, 2015