There might be disputes between stockholders in corporations that are closely held and this is commonly termed as a business divorce. While a business divorce can cause massive stress and anxiety among the stockholders but you need to know the long term effects that this dissolute will cause in the business. So what are some of the reasons for these disputes? Keep reading to know all about it.
• A stockholder who is looking for selling their stock should find a buyer must assume the risk that is involved in owning the piece of business but at the same time, they should do it by partnering with people they are in no way related with. So the trust factor is very little at times because of being strangers.
• The close corporations can at times operate without any kind of financial transparency that is otherwise needed by public companies. This often makes it difficult for many outsiders to ascertain the value of the stock and the business by extension.
• The goodwill of one close corporation often depends on the reputation as well as the relationships of the founders of the corporation. If they exit the business or a potential exit of them from the business can negatively affect the price of the corporation by a lot.
There are a lot of ways to resolve the disputes if the parties are willing to compromise and reach a common agreement. Before any party has thought of exiting the plan, the founders are advised to sort out their issues. There may be creative buy-out agreements which can be crafted to satisfy the stockholders and prevent them from exiting at an early stage. So make sure your corporation leaves no stone unturned to keep the stockholders from exiting.