The Free Press, Mankato, MN

Local News

April 1, 2013

Lawsuit over control of family-owned MICO ends with $21.8 M award

(Continued)

NORTH MANKATO —

Although the privately held company doesn’t disclose sales or profits, evidence and testimony provided in the lawsuit and trial indicated that MICO is a healthy company that weathered the recession with sales of $44.4 million in 2010, compared to a record $53.3 million in 2007. Projected sales for 2011 were $52 million.

After their parents died, Brent and Dan each owned 50 percent of MICO’s voting shares. Brother Mark, who died in 2007, and Larry, Gordon’s son from an earlier relationship, composed the company board of directors along with Brent and Dan.

Larry, a California resident, was the oldest of the siblings. He ran his own business, a consulting firm called McGrath & Associates, which provided information service products to the medical diagnostic industry. Judge Westphal described Larry as “a sophisticated businessperson.”

Dan was almost immediately on the outs with Brent, Larry and Gabriel, the former director of public safety for the city of Mankato who was hired to be Brent’s right-hand man at MICO.

First, Brent and Gabriel fired one of Dan’s key lieutenants over Dan’s objections “to force Dan to leave MICO and/or to sell his shares cheaply,” the District Court found. But when Dan offered to sell his shares for $3.9 million in 2004 — they had a market value of nearly $8 million — his brothers did not respond.

But they were talking among themselves.

In August 2004, Brent sent an email to Larry saying, “The situation at MICO is untenable. It is inevitable that either Dan or I will have to leave.”

By November, Brent was more adamant, telling Larry he no longer wanted to see Dan in the office. “The primary condition is that Dan works from anywhere that is not 1911 Lee Blvd. (MICO’s address).”

 

Dan’s demotion

 

Rivalry among siblings is not uncommon in family-owned businesses, said Ritch Sorenson, academic director of the Family Business Center at the University of St. Thomas.

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