By: Rob Harris
Among the most pernicious of disputes are those among owners of family owned businesses. The emotional entanglements between family members substantially complicate already thorny issues concerning business ownership and operation. A frequent and unfortunate byproduct of family fights is the loss of value to the business, negatively impacting all of the family members.
This phenomenon appears to have reared its ugly head in a dispute among the long time family owners of Tennessee’s Valley Brook Country Club. The club’s website recites the storied history of the club:
“Carl Drake opened Valleybrook’s doors in 1962, and from it a community was born…Valleybrook has been the proud host of nine PGA tournaments from the 1980’s and early 1990’s. Today we still play host to the City RedBud, one of the oldest tournaments in the area.”
Mr. Drake’s children ascended to ownership of the club, but disputes among them (which appear to be longstanding), have resulted in bitterly contested family litigation. The upshot is that the club is headed for the auction block, which reportedly will serve to liquidate the club’s assets with no regard for tax consequences or other ways to maximize value to the owners.
Careful business owners will contemplate the potential for disputes by including appropriate provisions in agreements that specify buy-sell arrangements designed to preserve shareholder value in the event of disputes. Also of substantial value in agreements is the inclusion of an appropriate dispute resolution provision, as mediation often is of special value to help address the emotional overtones of family owned business disputes. (For those interested, here’s an article I wrote a number of years ago regarding the “Passionate World of Business Divorce.”)