Family Businesses

News & Analysis as of

Tax Court Rules Corporate Merger of Family-Owned Businesses Results in Substantial Taxable Gift

In September, the Tax Court issued its opinion in Cavallaro v. Commissioner, T.C. Memo 2014-189, holding that a merger of two family-owned businesses resulted in a $29.6 million gift from Mr. and Mrs. Cavallaro to their three...more

What We Can Learn from Market Basket

We have all watched as the Market Basket family and business dispute has played out in the media – customers protesting, employees on strike and secret family meetings behind closed doors. What began as a small family grocery...more

Installment Terms for the Business Buyout in a Divorce

For many divorcing couples, a closely-held business is the most valuable marital asset. In most cases, it is likely that only one spouse will remain with the business, raising this key issue: How can the interest of the...more

Deferred Payments and Earnouts – A Potential Source of Family Discord

Let’s assume you are selling the family business. In order to get the best terms and price, you may not be able to negotiate the full purchase price in cash up front. More likely, some portion of the purchase price will be...more

Blood is Thicker Than Water: The Obligation To Bargain Over Nepotism Policies

It seems sensible for an employer to have a nepotism policy restricting the circumstances where an employee may supervise a family member (or make employment decisions such as compensation, discipline, evaluation, or...more

Transitioning the Family Business to the Next Generation

The transition of a family owned business involves a variety of legal and tax issues. While most business owners plan to avoid taxes and develop creditor protection strategies, business owners also should be focused on...more

“Corporate Governance” in a Family Business: Who Needs It?

Smaller family-owned businesses are often operated with a degree of informality that is both natural and efficient. The thought is that “corporate governance norms” are for someone else’s business—the big guys with their...more

Does “Hobby Lobby” Apply to My Family Business?

On Monday, June 30, 2014, the United States Supreme Court ruled that “closely-held” for-profit companies could be exempt from the Affordable Care Act (“ACA”) requirement to offer birth control coverage to their employees. As...more

Texas Supreme Court Denies Minority Shareholder’s Oppression Claims

On June 20, the Texas Supreme Court ruled that courts are not authorized to order closely held corporations to buy out a minority shareholder’s interests under state law, and that no common-law cause of action exists for...more

Business Litigation Alert: Texas Supreme Court Update - New Ruling Restrains Minority Shareholder Oppression Claims

The Texas Supreme Court recently issued its decision in Ritchie v. Rupe, a case that essentially eliminates the continuing viability of claims for minority shareholder oppression in Texas. The case involved a dispute over a...more

Income Tax – Transfers of Family Business To Children Tax Free

In Bross Trucking, Inc., TC Memo 2014-10, the United States Tax Court ruled that a taxpayer’s wholly-owned corporation that ceased operations due to its difficulty with regulatory authorities had no goodwill. As a result,...more

Family-Owned Business IPO?

A family business does not go public. Going public and sharing ownership with the rest of the world is the opposite of what a family business is striving to do. But the Modesto Bee reported earlier this week that...more

Bad Blood Makes Good Law: Minnesota Supreme Court Recognizes Tortious Interference Claim

In Gieseke v. IDCA, Inc., et al., No. A12-0713 (March 26, 2014), the Minnesota Supreme Court ruled that “tortious interference with prospective economic advantage” is a viable claim under Minnesota law. In so holding, the...more

Essential Employment Policies for Family Businesses, Part II

In this second round of “must-have” employment policies, we focus on rest breaks and meal periods. It can be devastating for any business, but especially a family-run business, to face claims of non-compliance with wage and...more

If You Think Your Family Business’s Service Contracts Limit Your Liability In All Situations, Think Again!

Family-owned businesses in the services industry in Washington (and beyond) should be paying attention to a recent Washington Supreme Court case addressing the “Independent Duty Doctrine” (also referred to as the “economic...more

Partial Ownership Redemption Plans in Family Businesses

The ability of a minority owner in a closely held family business to obtain liquidity for her interest in the company is often very limited. There is not a great market to buy small holdings in such companies. There are also...more

Serving as a Non-family Board Member of a Family Business

You have been approached by a long-time friend, the CFO of a family-owned business who is herself a member of the family. She asks if you might be interested in serving on the board of her family’s company. You are honored,...more

Keeping Ownership in the Family

As a family enterprise, your business runs best if it is owned and managed by the family. So it is in everyone’s interest to make sure no family member can transfer ownership outside of the family. To do this (and do it...more

California Court Issues Non-Competition Order

Covenants not to compete have been in legislative disfavor in California since 1872. This animus is currently codified at Section 16600 of the Business and Professions Code which provides that with certain statutory...more

Leading the Family

Selling or transitioning a family business can be a daunting task – especially for those individuals trying to lead the process on behalf of their family. The challenges can result from the multiple owners and stake-holders...more

Family Businesses and Environmental Liability

We all know that environmental laws impose heavy liability on businesses that release environmental contaminants into the air, soil or water. The family business is not immune to such liability. In fact, many...more

Transition Planning: Key Steps for a Successful Exit From a Closely Held Business

Executives of closely held and family-owned businesses are often so focused on running their businesses that they do not plan for the inevitable — the transition of ownership and/or leadership. It is not a question of “if ”...more

"Key Man Discount" Factors Critical in Fair Value Business Disputes

Family business disputes oftentimes uncover who is actually calling the shots and making a big difference in the profitability of a company. As described in previous Shareholder Rights blogs, the Wisniewski shareholder...more

Email Users Beware: Companies and Corporate Officers Should Evaluate Email Practices in Light of Delaware Chancery Court Decision

On September 5, 2013, the Delaware Chancery Court ruled that the attorney-client privilege does not protect from disclosure emails sent by corporate officers to their personal attorneys using the company’s email account. In...more

Recent Shareholder Oppression Case Uncovers Family Business Disputes

Wisniewski v. Walsh, an interesting unpublished decision by a New Jersey appellate court, involves more than 10 years of a family dispute over a business. The litigation covers a wide range of issues, including how siblings,...more

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