A legal dustup between a local IT consulting firm and its founder has been squashed.
Michael Pirron and Impact Makers on Monday settled a lawsuit in which the former CEO sought to undo what he alleged was an illegitimate sale of the company that benefitted its current executives and sought to diminish his authority.
Pirron, who was forced out of the company last year and is now a vice president at competitor Networking Technologies + Support, filed the lawsuit in Richmond Circuit Court in mid-May, seeking the reversal of the sale of Impact Makers shares to Benefit Holdings Inc. for $18 million in damages, which he wanted paid back into the company.
The parties issued a joint statement Monday confirming the settlement.
“Impact Makers and Michael Pirron have come to an agreement which resolves existing litigation and demonstrates both parties’ commitment to the principles of Benefit Corporations and social enterprise,” the statement read.
Pirron, in his own separate statement, said the settlement reversed the sale of Impact Makers to Benefit Holdings, which the lawsuit claimed was created by Impact Makers’ top brass days prior to voting on the deal.
“The purpose of this lawsuit was to reverse the illegitimate sale of controlling interests of Impact Makers, last valued at $17.8 million, for a mere $1,000,” Pirron said. “This action had been taken by the board for one purpose: to obliterate the governance structure put in place to protect the community value and the unique social enterprise model. We achieved our goal with the lawsuit.”
As part of the settlement, Pirron will remain as permanent director of Impact Makers Holdings, the holding company that now owns Impact Makers. Community Foundation CEO Sherrie Armstrong will take over as Impact Makers’ senior director, a role Pirron previously held.
Pirron founded Impact Makers as a for-profit consulting firm in 2006 and converted the company into a “benefit corporation,” which means it promises to donate its leftover profits to charity.
The company grew to upwards of $20 million in revenue annually and gained notice for routinely landing on lists of Richmond’s fastest-growing companies.
It also garnered attention in 2015, when it donated the equity of the company to two local nonprofits: The Community Foundation and Virginia Community Capital. That structure would allow the two charities to benefit from the proceeds of a future sale of Impact Makers, which Pirron claims was valued at the time at $13.4 million.
Pirron claims the list of defendants, which also includes Impact Makers executives and directors Karen Coleman, Teresa DiMarco, Scott Walker, W. Wilhelm Rabke, Andrew Wolff, Rodney Willett and Marianne Vermeer, sought to institute internal changes that he felt diminished the value of the promised gift to Community Foundation and VCC.
In addition to filing the lawsuit, Pirron went to great lengths to make the dispute known. That included putting out a mass message on his LinkedIn page and creating a separate website that aired his grievances.
The website included statements from prominent Impact Makers investors about their intent to join Pirron as plaintiffs in the case.
Among them was Richmond-based Ellwood Thompson’s owner Rick Hood and Ben & Jerry’s co-founder Jerry Greenfield.
In a statement, Greenfield said he wanted to see the “mission and model of Impact Makers protected by the governance structure designed to do just that.”
“I have joined this lawsuit to ensure that protective governance model is preserved in this unique all-profits-to-charity social enterprise,” Greenfield said.
Hood, whose Ellwood Thompson’s is also a B-corp, said in a statement that Impact Makers’ sale “could weaken the benefit corporation status by setting an unwise precedent and making it too easy to reverse its purpose by others when it seems convenient.”
Others who’d lined up to potentially join as plaintiffs include Michael Hannigan, an Impact Makers investor, and Michael Cousins, an Impact Makers board advisor.
The defendants initially fought back, filing a countersuit against Pirron in Henrico County Circuit Court in late May, alleging he violated a nondisparagement clause from his severance agreement. That case is also set to be dismissed as part of the settlement.
Pirron and Impact Makers was represented by attorney Thomas Wolf of LeClairRyan and Tricia Dunlap of Dunlap Law.
In his statement, Pirron said the settlement ensures oversight of any future sale of Impact Makers and that “any future accepted acquisition offer is market value and fully funded.”
He thanked Impact Makers’ board and said that he’s “excited about the opportunity to bring on new board members of national renown in the social enterprise space to lead Impact Makers governance into the next phase of its growth.”