The Shareholder Everyone Assumed Would Agree
Why ownership consent must be established rather than assumed
Everyone Thought They Were in Agreement
I recall a business sale that nearly failed for reasons unrelated to financial performance or market value. The company had been established years earlier by two partners, both of whom had since passed away. Ownership interests had passed to members of their families.
The principal shareholder and management team knew about a minority shareholder's interest and genuinely believed that shareholder would support the sale. No one was trying to conceal the ownership.
But as the transaction progressed, the minority shareholder proved unwilling to cooperate as anticipated. An assumption became a serious obstacle to closing.
Minority Ownership Doesn't Necessarily Mean Minority Influence
Owners sometimes assume a small ownership percentage means little ability to affect a transaction. Actual rights depend on governing documents, applicable law, and whether the deal is structured as an asset or stock sale.
Even when a shareholder cannot legally block a particular transaction, disagreement can introduce delay, expense, uncertainty, or litigation risk. Buyers want confidence that sellers have the authority and ability to close.
Why Assumptions Become Expensive
Business sales consume substantial time and resources: financial disclosures, due diligence, financing, and legal documentation. A late shareholder dispute can put all of that work at risk.
In this case the ownership interest had been known all along. The missing step was confirming that the owner actually supported the transaction.
The Conversation to Have Before Going to Market
Before marketing a business with multiple shareholders, I want to know whether they share the same goals, timing, valuation expectations, and understanding of the approvals required.
Family history and longstanding relationships can create expectations of agreement, but family members may have different financial needs, employment interests, or views of the company's future. Qualified legal counsel should review governing documents and approval requirements.
How the Situation Was Resolved
Fortunately, the minority shareholder was ultimately persuaded to participate, and the transaction closed.
I wasn't involved in the discussions that led to that decision, so I can't say what changed the shareholder's mind. The sale was rescued, but it could easily have been lost.
The Lesson
Knowing who owns a business is not the same as knowing whether those owners are prepared to sell it.
Never confuse an assumption of shareholder agreement with actual shareholder agreement.