Sadis & Goldberg’s industry-leading Shareholder Disputes practice has helped shareholders and investors recover hundreds of millions of dollars. Our Shareholder Disputes practice focuses on enforcing the rights of shareholders, investors and founders of privately-held and public companies against shareholder oppression, unfair squeeze-outs and buy-outs, fraud, breaches of fiduciary duties, and corporate control contests. If you are a shareholder, investor or founder facing a dispute, or questioning whether your rights have been violated, we can help you understand your options, maximize your recovery, and win the best outcome.
Minority Shareholders, Investors and Founders have far more rights than they realize. State statutes and common law protect minority shareholders and investors against oppression, self-dealing, waste, and other misconduct by majority shareholders, officers, and directors. When controlling shareholders, officers or directors squeeze out a minority owner, divert company assets, or withholds distributions, the law provides strong remedies including damages, a court-ordered buyout at fair value, an unwinding of improper transactions, or dissolution. We regularly represent minority shareholders who assumed they had no recourse until they spoke with counsel.
Shareholders and Investors have strong remedies when a merger, acquisition, or take-private transaction cashes them out at an unfair price. You can exercise Appraisal Rights to opt out of an unfair deal and instead have a court determine the fair value of their investment, plus interest. You can also seek damages when a merger, acquisition, or similar transaction forces you out at an unfair price or in a deal where the majority shareholder, officers or directors have conflicts or benefit at your expense. We have helped investors recover millions of dollars above the deal price, including a $57.7 million recovery in a Delaware appraisal action.
Shareholder and Founder disputes can take many forms: Disputes between Founders; disputes between majority and minority shareholders; unfair squeeze-outs or buy-outs; deadlock between owners, breaches of fiduciary duty, corporate governance and control disputes; and claims arising from self-dealing or mismanagement. We handle direct claims on behalf of individual shareholders or founders, shareholder class actions challenging unfair transactions, and derivative actions brought on behalf of the company.
We regularly handle Shareholder Disputes, Investor Disputes and Founder Disputes on a full contingency basis, or on a hybrid hourly and success fee basis. If you would like to discuss your matter free of charge, please contact our Shareholder Disputes attorneys.
Minority shareholders have rights under common law and state statutes, including rights against Mergers or Squeeze-Out transactions at unfair prices; the right to inspect company books and records; the right to be treated by officers & directors with loyalty, good faith, and care; and in many cases, to seek a buyout or dissolution. Many of these rights cannot be waived, even by agreement.
Appraisal rights allow a shareholder to opt out of a Merger, Acquisition or similar transaction, and instead petition a court to award the shareholder the fair value of his or her shares instead of the deal price. If the court finds the shares were undervalued, the shareholder may recover the difference, plus interest.
In an Appraisal Rights or Shareholder Dispute alleging a breach of fiduciary duties, Fair Value is the shareholder or investor’s share of the value of the Company as a Going Concern, assuming that it continues to operate and produce cash flow into the future. Fair Value is determined by looking at all indications of value, but usually turns on a determination of what value a third-party would pay in an arm’s length transaction. Where a Transaction involves a Director, Officer or Controlling Stockholder with a conflict of interest, the value is often determined using a Discounted Cash Flow analysis of the Company.
A shareholder may have an oppression claim when a controlling shareholder or the board acts to defeat the a minority owner or shareholder’s rights, for example by freezing or squeezing them out, withholding distributions, or diverting company opportunities. Remedies can include damages, a buyout, or other relief.
It is critical that you contact a lawyer immediately if you get into a dispute with a Founder or Co-Owner. You need to immediately examine all corporate documents to determine what happens if the other Founder or Owner tries to throw you out, withhold distributions, fire you, or take Company assets. We can speak with you immediately for an initial no-cost assessment, to determine your rights, your risks, and the best fee structure.
A Derivative action is a claim brought by a shareholder or investor on behalf of the company to recover for harm caused to the Company by directors, officers, or controlling shareholders, such as breach of fiduciary duty or self-dealing. Any recovery generally goes to the company rather than to the individual shareholder. A Derivative action is usually brought when the harm is caused to the Company rather than the individual in particular.
