Governance documents must address foreseeable situations

From time to time we come across a family business that spends some time, energy and legal dollars on a governance document. After a quick read of the document, we discover that although it addresses the buyout of a family member’s death or disability, it does not provide a remedy for insubordination, deadlock, unprofessional behavior, theft or other foreseeable issues.

Addressing straightforward occurrences such as death or disability of an equity owner is just the tip of the iceberg. Family business owners need a document that provides significant assurance that should an issue arise between family member equity owners, the dispute — and, if necessary, a separation — will take place outside the courts.

In addition to the costs and distractions that result from litigation, the family business will be detrimentally affected if it is involved in a very public process that puts its dirty laundry on display for all to see.