Avoiding 50/50 Business Owner Deadlocks

Foster Swift associate, Laura A. Kane, recently appeared on an episode of the Michigan Business Network's podcast to discuss how 50/50 business owners can avoid costly deadlocks with smart agreements, tiebreaker provisions, and planning.

In the conversation, Laura discussed:

1. What is a tiebreaker provision, and why is it important in a 50/50 owned company?
2. What problems arise when two equal owners disagree on a major business decision?
3. What happens if a governing agreement contains no deadlock or tiebreaker mechanism?
4. What types of disputes most commonly create deadlocks between equal owners?
   1. Hiring or firing executives
   2. Capital contributions
   3. Sale of the business
   4. Taking on debt
   5. Expansion plans
5. What are the most common tiebreaker provisions used in shareholder agreements and operating agreements?
6. Many business owners focus on how to start a company. Why is planning for disagreement and deadlock often just as important as planning for success?

Listen to the full interview here.