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3 minute read
August 25, 2026
3 minute read
I’ve sat across the table from a lot of families who thought the hard part was over.
The child's been running the floor for six years. The parent is ready to step back. Everyone in the family knows the plan. There’s a handshake, maybe a toast at Thanksgiving, and an assumption that the paperwork will just catch up to what everyone already agreed to.
It usually doesn’t. And when it doesn’t, I’m the one they call after the dispute has already started — not before.
The Handshake Isn’t the Plan
Here’s what I’ve learned after fifteen years of litigation: the relationship almost never fails first. The documents do.
A family transition feels emotionally settled long before it’s legally settled. Dad trusts his son. The son trusts his dad. Nobody’s worried about a fight. But the operating agreement was drafted twelve years ago, before anyone was thinking about a transition, and it still says every major decision requires unanimous member consent. Under Wisconsin’s LLC law, that’s not just boilerplate — if your operating agreement is silent or outdated on a particular issue, the statutory default fills the gap. And the default on many governance questions is unanimity. For a manufacturing business trying to move fast on a transition, that can grind everything to a halt.
What “Ready” Actually Means on Paper
If you’re structured as an LLC, Wisconsin law draws a sharp line between financial rights and governance rights when a membership interest transfers. The son can receive the right to distributions without automatically getting a vote or a management role — unless the remaining members consent or the operating agreement provides otherwise. And if there’s a transfer restriction in your operating agreement, it’s only enforceable against a transferee who had actual knowledge of it or received conspicuous notice.
If you’re structured as a corporation, the rules are different but just as unforgiving. A share transfer restriction has to be conspicuously noted on the certificate itself, or in the information statement for uncertificated shares, or otherwise actually known to the person acquiring the shares — or it doesn’t bind them. I’ve seen family businesses assume a restriction was in place because everyone always understood it that way. Understanding it isn’t enough. It has to be documented, and it has to be visible.
Where These Transitions Go Wrong
Picture a manufacturing business — three generations in, revenue in the mid-market range, structured as an LLC. Dad and his brother built it. Dad’s son has been running operations for years and is ready to take majority control. The buy-sell provision in the operating agreement is old, and nobody’s looked closely at the valuation language since it was drafted.
When the transition starts, a disagreement surfaces over what “value” means in that provision — book value, fair market value, a multiple of earnings, something else entirely. Nobody agrees, because the document never precisely said. Wisconsin courts will enforce valuation provisions as written, but they can’t supply terms the parties never agreed to — and when an agreement is genuinely ambiguous, the outcome is unpredictable and expensive to litigate. What should have been a family transition becomes a valuation dispute, and valuation disputes in closely held businesses are some of the most expensive, drawn-out fights I’ve handled.
The Preventive Version of This Story
Here’s the version I’d rather be part of: the family comes in eighteen months before the planned transition. We look at the operating agreement together — not to rewrite the relationship, but to make sure the paperwork actually reflects it. We define what “value” means, in plain terms, before anyone has a financial stake in interpreting it one way or the other. We confirm who has voting control during the handover period, so there’s no ambiguity about who’s making decisions on day one of the transition and day one hundred. We make sure the transfer mechanism works — that the son actually ends up with governance rights, not just a check.
This is what the outside general counsel relationship is built for. I’m not parachuting in when something’s already gone sideways — I already know the business, the family, and the documents, because I’ve been the one keeping them current all along.
Where to Start
You don’t need a fully built succession plan by next quarter. You need to know one thing: does your operating agreement or shareholder agreement actually say what everyone in the family assumes it says? For most businesses I’ve worked with, the honest answer is “we’re not sure” — and that’s exactly the moment to find out, before a transition puts it to the test.
If you’re the parent or the son or daughter in this story and you’re not sure what your agreements actually say, that’s worth a conversation. Reach out directly and we’ll talk it through.
This post is for informational purposes only and does not constitute legal advice or create an attorney-client relationship.
