How a disputed buy-sell agreement challenges the Steely Dan brand
Steely Dan, the Rock N Roll Hall of Fame Rock/Jazz fusion band has an amazing history with numerous songs that can get toes tapping and heads swaying. But with the death of founding member Walter Becker, heads are throbbing due to avoidable legal woes.
Becker’s widow and his estate are suing surviving founding member Donald Fagen for 50% ownership of the duo’s songs. Fagen, through his lawyers, contends that the buy-sell agreement two song-writing and recording partners signed in 1973 is still in full force and gives Fagen 100% ownership of the duo’s work and the associated royalties.
Simply put, a business continuation (buy-sell) agreement is a legal contract providing terms for the disposition of a business interest in the event of the owner’s death, disability, retirement, or upon withdrawal from the business at some earlier time. This agreement will also ensure that the business can continue into the future with as little disruption as possible. In a buy-sell agreement, the percentage of the business owned by each principal is accounted for upon the demise of each owner.
Through a buy-sell agreement the possible arrangements could include
- The ownership of the decedent passing on to surviving family members
- A new owner may be named
- Surviving owners may be offered the opportunity to buy out the percentage of the decedent should surviving family members not wish to retain ownership or participation in the business moving forward.
Think of a buy-sell agreement as an extension of a last will and testament, and really any business owner preparing his last will should consider establishing buy-sell agreements for the benefit of not only his heirs but his business partners.
While buy-sell agreements have been in existence for decades, many business partners view them as unnecessary through the belief that their working and personal relationships will never sour. In the case of the music industry, ownership of songs (and the on-going royalties for hits) become coin of the realm. As was seen with Steely Dan, Simon & Garfunkle and The Beatles to name a few, when friendships and collaborative relationships go south, the strains of beautiful music can often give way to the rustling of letters and court orders when groups are dissolved and members die.
As the case of Steely Dan makes its way through the courts, the validity of the 1973 buy-sell agreement will be determined. While this whole sorry situation will not taint the amazing body of work of two talented musicians, the resulting bad blood between Fagen and his former partner’s widow was sadly unavoidable.
