But the first inkling that the relationship between the two partners might fray came soon after the founding of the acquisition company. According to court documents, Hurley’s original vision had been that FN would purchase 100% of the equity of small wealth management firms. Hurley himself had a 19% ownership, one of the documents said. But Milstein’s intention was different. Milstein’s 75% ownership was held through Emigrant Bank/EB Safe, and he wanted FN to structure the investments not as equity but as transition-financing debt held by Emigrant, which reduced the number of wealth management firms FN could target from approximately 18,000 to about 400, the document said. (The remaining 6% ownership was held by FN management.)

Ultimately Hurley acquiesced and accepted Milstein's plan and, from 2007 on, publicly stated numerous times that minority equity stakes acquired with debt was the plan. But when the LLC agreement allowed Hurley to get out of the deal in December 2016 by forcing a sale, he did just that.

The process for sale had been laid out in the LLC agreement as follows: If Hurley forced a sale, Milstein (through Emigrant/EB Safe) could exercise a call right prior to the selection of a banker, or by making an offer to Hurley and other management to purchase the remaining 25%. If Milstein didn’t exercise the call, or made an offer that was rejected, then an investment bank would be engaged for the sale and a negotiating committee would evaluate the offers, with the highest bidder winning.

However, Milstein then had one more shot at acquiring the 25% stake at a price corresponding to that highest qualifying bid under a right of first refusal, plus a 10% break-up fee for the winning bidder.

After Hurley gave written notice he was exercising his forced sale right, EB Safe initially waived its call right, but then initiated the first arbitration to reclaim that right as FN moved on to find an investment bank. The first tribunal’s decision in August 2017 allowed the sale to go forward but declared that EB Safe’s call right could be reinstated in August 2018 if the sale process, which was to take 12 months, was not successful. And that’s when the acrimony started heating up, the documents indicated.

Between August 2017 and the next arbitration four months later, the two sides disagreed on who the investment banker would be, the role of the FN Board and the negotiating committee, the kinds of disclosures that would be made to bankers in the running, the format of choosing a banker (one side wanted to subject candidates to a “bake-off”), and, most importantly, the method of valuation for FN, according to the documents, as Hurley argued that Milstein was now had the incentive to get the lowest price possible for FN.

In November 2017, another Emigrant Bank-launched company called HPM Partners sold for $77.1 million, or 29.73x EBITDA. This was a registered investment advisor and a stand-alone wealth management business that was intended to be a firm aggregator like FN.

According to Hurley, the two businesses were enough alike that the HPM valuation could apply to FN. According to Milstein/EB Safe, HPM was a wealth manager and not a specialty lender to wealth managers, so the multiple was immaterial. The panel ruled that the two businesses were comparable and that the valuations should have been disclosed to the investment banker.

In addition to these disagreements, both sides were quoted in the financial press in ways the other side found objectionable, including the dissemination of a lowball valuation for FN of $70 million to $80 million.

The second arbitration was initiated in December 2017, again by EB Safe and this time to prevent Hurley from participating in various aspects of the sale process. The second tribunal found in Hurley’s favor and allowed the 12-month clock on the sale process to start again.