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Distinguishing between an entity and the ownership of equity in that entity is not difficult. But it is surprising how often those two distinct concepts become conflated or obscured in the drafting of commercial agreements. Thus, in a New York case involving the interpretation of a prenuptial agreement, a spouse was denied a share of the proceeds of the sale of stock owned by her ex
in a company because the agreement, as drafted, specified that she was only entitled to a share of the proceeds from a sale
On January 28, 2021, the Indiana Supreme Court decided
Hartman v. BigInch Fabricators & Construction Holding Co., rejecting the short-lived distinction between divorce case business valuation discounts from discounts in other settings and establishing a new precedent for business law practitioners.
Revisiting the Case
BigInch was a closely held corporation in the business of fabricating and installing natural gas and pipeline stations and related apparatus. Blake B. Hartman was one of the founders and a former president of BigInch.
In 2006, the shareholders to the corporate predecessor of BigInch, each owning a minority position, entered into a shareholder agreement. The shareholder agreement required the company to purchase the shares of any shareholder who was involuntarily terminated as an officer or director of the company based on an appraised market value by a third-party valuation company. In 2018, Hartman was involuntarily terminated from his position as a director and o