The person owning the majority of the business either may not know or may no longer want to be involved with those persons owning smaller interests. Minority interests often are created when cash is short and expectations are high. Over time, however, many problems can arise.
Key employees can die, become disabled, leave the company, or be demoted or fired.
Friendships can sour. Interests can be transferred to persons whom the majority owner does not know. Without proper planning, the majority owner may be unable to retrieve previously transferred interests. Moreover, the valuation of minority interests can be very difficult and lead to significant disagreement. At a time when the business is succeeding, the majority owner suddenly may find himself or herself fighting with minority owners.