Chapter 5 - RICHARD'S STORY
Richard’s defense was different.
He did not defend the insult.
He defended the company.
He told Grace:
“Carter Medical cannot pay ten million for Hannah’s shares.”
“Then don’t buy them.”
“She wants liquidity.”
Hannah answered:
“I never said that.”
Richard looked at her.
“You told your divorce lawyer you might need cash.”
“For legal fees.”
“You were talking about selling.”
“Exploring is not electing.”
Richard pressed on.
If Hannah sold to an outsider, company governance could become unstable.
The agreement restricted outsider transfers, but litigation could still become expensive.
The family buyback mechanism protected everyone.
He believed $4.18 million was fair under the contract.
Grace asked:
“Then why not give Hannah the valuation workpapers?”
Richard paused.
“They’re confidential.”
“She’s a shareholder.”
“That does not mean unlimited access.”
Smart answer.
Potentially lawful.
But suspicious.
Grace later obtained the minutes from the valuation committee meeting that approved the $4.18 million figure.
Richard had recused himself from the formal vote.
That helped him.
Evelyn had not been on the committee.
That helped her.
But before the meeting, Richard emailed the committee chair:
We need a conservative number that does not reward marital instability with a premium exit.
The phrase was ugly.
Lauren argued it reflected a governance concern, not a command to underprice Hannah.
Grace asked Richard what “marital instability” had to do with the company’s fair value.
He answered:
“A shareholder in litigation creates uncertainty.”
“Then price litigation risk directly.”
“That is what the discounts do.”
“Then why mention her divorce at all?”
Richard paused.
He had a business explanation for almost everything.
This sentence had mixed business with judgment.
It showed how personal beliefs could enter a valuation process even when the spreadsheet looked neutral.
The committee chair later testified Richard did not dictate the final number.
That protected the appraisal from being labeled fraudulent.
But the email became another reason the company agreed to reform future valuation governance.
Richard also had a legitimate fear Hannah initially dismissed.
Carter Medical’s shareholder agreement restricted transfers to outsiders, but not perfectly.
A divorce court could not award Andrew Hannah’s inherited shares directly under state law, but litigation over distributions, appreciation, and financial disclosures could still create:
discovery burdens,
valuation fights,
temporary injunctions,
and lender concern.
Richard believed consolidating Hannah’s shares would eliminate that risk.
Grace asked:
“Did Andrew ever demand the shares?”
“No.”
“Did his lawyer?”
“No.”
“Did anyone threaten an outsider transfer?”
“No.”
“Then you were solving a hypothetical problem by forcing a real transaction.”
Richard bristled.
“Good governance solves problems before they become real.”
Grace nodded.
“Not by misrepresenting someone’s rights.”
That was the line Richard could never answer cleanly.
Then Hannah produced an email Richard had forgotten.
From the company CFO:
HANNAH IS ENTITLED TO THE MOST RECENT VALUATION SUMMARY UPON WRITTEN REQUEST.
May you like
Hannah had requested it.
Nobody sent it.
