John Alfonsi of Cendrowski Corporate Advisors answers the question: What is a dissident shareholder and how can dissident shareholder action be best handled?
In this Cendrowski Business Minute, John Alfonsi explains what a dissident shareholder is and how to handle their actions. A dissident shareholder is a minority shareholder in a privately held company who feels they are being forced out or the company is not being run properly. They can force a sale or redemption of their interest in the business as they have limited rights as a minority shareholder. The best way to handle this situation is to contact competent legal advisors and have a valuation of the minority interest in the business. Cendrowski Corporate Advisors, a CPA firm, can help determine fair value for the oppressed or dissident shareholder. They can be reached through their toll-free number 866-717-1607, website cca-advisors.com, or email jta@cendsel.com. Contact Cendrowski Corporate Advisors for help with business valuation and any related questions.
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Transcript:
Dave Lorenzo: And now it's time for another Cendrowski Business Minute. And here with today's Business Minute is John Alfonsi. So John, what is a dissident shareholder and how can a dissident shareholder action be best handled?
John Alfonsi: So a dissident shareholder is typically a minority shareholder in a privately held company that feels somehow they're either being forced out or the company isn't being run according to what they've otherwise been doing. But as a minority shareholder, they have very few rights. So the only thing they can do is force a sale or a redemption of their interest in the business.
So if somebody feels that the company is otherwise not operating properly, or that they've been forced out or are otherwise being forced out, say they're also an employee, they've been terminated, and now their stock has to be redeemed, first thing they need to do is contact competent legal advisors. It's generally going to, a lot of these times they can be resolved through negotiations, but you need a good attorney to help with that process.
The other piece is you're going to need a valuation of what your minority interest is in this privately held business. I do a lot of work with attorneys either as a consultant or as an expert if it gets to trial and requires testimony to determine what is the value of that minority interest in that business for purposes of making sure that that dissident or oppressed shareholder is receiving their fair value. And that's where the key is in state law terms. Generally, the standard of value is fair value as compared to fair market value.
Dave Lorenzo: So John, how can people reach you if they have a question about the value of their business, or maybe they have a dissident shareholder in their midst and they need fair value determined for their business? How can they get ahold of you?
John Alfonsi: Sure. Whether it's the business or the oppressed or dissident shareholder, you can reach us at our toll-free number 866-717-1607, visit our website cca-advisors.com, or email me directly at jta@cendsel.com.
Dave Lorenzo: All right, this has been your Cendrowski Business Minute. We'll be back here again tomorrow with another Business Minute. Need help with anything related to a valuation, you can give John a call at Cendrowski Business Advisors. Cendrowski Business Advisors is a CPA firm with a different perspective.
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About Cendrowski Corporate Advisors:
Enterprises, privately owned companies, and high wealth individuals have come to rely on Cendrowski Corporate Advisors’ specialists, as well as its comprehensive tax, advisory, and outsourced accounting and finance services. Core competencies for the firm include family office services, business valuation, fraud investigation, and dispute advisory.
We are trusted advisors to a diverse range of clients: high-level financial institutions, venture capital and private equity firms, middle-market companies; high net worth individuals, family offices, nonprofit organizations, start-ups, and other entrepreneurial ventures. The legal community—attorneys and courts alike—count us among its trusted expert witnesses, and mediators, on behalf of our clients. Cendrowski Corporate Advisors is also engaged by financial professionals, bankers, and investors who serve these clients.
Contact us via our website, cca-advisors.com, or at (866) 717-1607.
