Shareholder disputes are often initiated by a non-controlling or minority shareholder who believes they are being disadvantaged by majority holders, management or the board of directors. Some of the factors that contribute to this are:
- Different levels of financial knowledge and background
- Different levels of involvement in the financial management and responsibilities of the company
- Frustration about different levels of compensation or questions about the validity of compensation paid
- Questions about the level or form of distributions from the entity
- Different expectations regarding the price and potential dilution from a transaction or investment fund raising
VFP works for both plaintiffs and defendants in these cases and is also sometimes hired to serve as neutral in mediation or settlement negotiations.
Shareholder disputes often end up in litigation due to a number of factors including:
- Lack of discovery / access to records
- Lack of cooperation by the parties
- Questions about the accuracy or completeness of financial records or reported financial information. See Financial Forensics for Shareholder Disputes
- Disputes about the value of the business (or a specific interest in the business). See Business Valuation for Shareholder Disputes
- One or more of the parties not understanding the realities – the costs and tradeoffs – of litigated shareholder disputes
VFP has experience in helping clients settle these disputes prior to litigation. We also have experience working with clients throughout the litigation process.