Business Divorce: Assisting Minority Investors in Private Companies

As an investor, the allure of private company investing lies in the potential for significant financial gains. However, minority investors who acquire stakes in emerging or high-growth businesses are well aware that this type of investment carries substantial risks. At Garrity Traina, we understand the challenges faced by these investors and offer expert representation through our Business Divorce team.

Advocating for Minority Investors

Our experienced team specializes in representing minority investors who hold substantial investments across various industries, including technology, real estate, manufacturing, energy, banking, healthcare, pharmaceuticals, insurance, construction, restaurants, and e-commerce. When conflicts arise with a company’s majority owners, we actively protect and enforce the rights of our investor clients.

Challenging Freeze Out/Squeeze Out Tactics

In some unfortunate instances, our investor clients have found themselves subject to freeze out or squeeze out tactics. These tactics involve being forced out of the business, denied their fair share of company profits, or unjustly barred from participating in the company’s management or operation. In such cases, majority owners often breach their fiduciary duties, causing harm to minority investors. However, we stand by our clients, working closely with them to identify their business goals, and creating a detailed, customized plan to achieve those objectives.

Guiding Investors Through the Process

At Garrity Traina, our business divorce lawyers provide comprehensive advice and assistance throughout the entire investment journey, from the initial consideration of investing in a privately held company to the eventual exit. We negotiate purchase terms for our clients’ acquisition of interests in the company and ensure the inclusion of a binding contract exit plan. Should vital information be withheld from our investors, we help them access the company’s books and records to evaluate performance and the value of their minority stake.

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Pragmatic Approach to Litigation

While litigation is an essential tool in our arsenal, we adopt a pragmatic approach. We only pursue legal action on behalf of minority investors when the majority owners refuse to negotiate a reasonable business solution. In the event that litigation becomes necessary, our team boasts a successful track record in state and federal courts, as well as arbitration proceedings.

Comprehensive Services for Minority Investors

At Garrity Traina, we offer a wide range of services specifically tailored to the needs of minority investors. Our services include:

  • Preparation of exit plans such as buy/sell agreements and redemption contracts
  • Reviewing and negotiating executive employment agreements
  • Issuing books and records requests to obtain financial and business records
  • Assisting with the documentation of exits from the company
  • Modifying corporate governance documents, including bylaws and LLC agreements
  • Litigating claims against majority owners, officers, and directors

Ensuring a Favorable Business Exit

When the time comes for our clients to exit a business, we strive to secure a buyout on favorable terms while safeguarding their rights as minority owners. Should litigation become necessary, we work closely with highly qualified expert witnesses, such as forensic auditors and business valuation professionals, to determine the extent of wrongdoing and assess the value of the minority-held ownership interest. Throughout the entire process, our focus remains on achieving results that align with our clients’ business objectives in a cost-effective, efficient manner.

For expert representation and guidance in business divorce matters, trust Garrity Traina. Visit Garrity Traina to learn more about how we can help you protect your investment.

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