Chapter 19 - The price of Ethan’s fifteen percent

Independent valuation:

Warren Specialty Logistics equity value:

$44 million after warehouse sale and debt adjustment.

Ethan’s 15% gross pro rata:

$6.6 million.

But minority discount and transfer restrictions reduced fair-value scenarios.

Expert ranges:

$4.8–$6.1 million depending legal standard.

Of his shares:

5% acquired before marriage.

10% granted/vested during marriage.

Some of the 10% subject to company repurchase if employment terminated for cause?

Operating agreement:

Certain unvested units repurchased.

But his 10% were vested.

No forfeiture.

Good.

Marriage division:

Not automatically half of 15%.

Separate 5%.

Marital 10%.

Appreciation of separate portion due marital labor potentially partly marital depending jurisdiction.

We negotiated.

I did not want his shares.

Conflict.

Company did not want me increasing trust stake through divorce complications.

Could company redeem part?

Yes, subject bank covenants and board approval.

Board proposed:

Redeem 6% of Ethan’s 15% for $2.55 million cash/note combination.

Ethan retains 9%.

Would that fund divorce equalization and legal costs.

But was company required?

No.

It was optional.

Outside investor Julian Morse worried:

“Do not use company cash to solve founder-family divorce.”

Correct.

Proposal adjusted:

Company pays $1.2m cash.

$1.35m secured note over eighteen months.

Ethan keeps 9%.

Bank approved only if debt ratios maintained.

Then divorce asset pool outside shares:

House equity $1.1m.

Brokerage $1.4m.

Retirement $900k combined.

Cash $370k.

My trust interest separate/inherited.

Ethan’s 5% premarital shares separate.

Marital 10% substantial.

Potential equalization to me could be millions.

I was already wealthy via trust.

That did not erase equitable division.

But I did not want litigation consuming a year.

Then Ethan proposed:

I retain house.

He transfers $2.1m cash/equivalent from redemption and brokerage.

I waive further claim to his retained 9% shares except agreed value reconciliation.

He keeps most retirement.

Child support determined separately.

No spousal support.

I considered.

Margaret was corporate counsel, not divorce. My divorce attorney Lena Foster evaluated.

Fair range?

Within reasonable settlement range.

Then criminal case could affect his future income.

No need to wait.

We were close.

Then Ethan’s employment arbitration decision arrived.

Termination for cause upheld regarding undisclosed conflict and material governance breach.

But arbitrator did not find intentional fraud because not necessary.

No severance beyond accrued salary/benefits.

Ethan lost approximately $520,000 expected severance.

Not shares.

That pressured settlement.

Then he asked for one thing.

No public statement by me calling him a thief unless convicted.

I agreed to mutual non-disparagement limited to false statements, not court testimony or truthful required disclosures.

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No silence purchase.

Then the criminal trial began.