Los Angeles, CA asked in Mergers & Acquisitions for California

Q: My son wants to purchase part of the family business from his brother

but they are disputing the price. What's the best way to deal with this?

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1 Lawyer Answer

Jonathan R. Roth

Answered

A: There are a number of ways to do this but the two most common are:

1. have someone independently value the stock being purchased without adjustment for minority ownership or lack of control (there are a variety of ways to deal with selection of who values the business);

2. look at any stockholder agreement that exists for how it determines value;

If they can't agree upon price of the stock, are they going to be able to work together? Are both sons going to work in the business and is one going to have less ownership than the other?

Also, if the family business is owned by multiple family members you need to consider the impact of what is transpiring now.

To give a really good and thoughtful recommendation more information is needed.

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