You have come to an impasse with your business partner, or have decided to proceed with a buyout of their shares, or maybe you’re dealing with the tragedy of a business partner passing away. When you bring that issue to a corporate lawyer, one of the first questions they’re going to ask about your business is: do you have a shareholders’ agreement?
Now, maybe you were getting into business with a friend or a family member, or maybe you thought your business was too small to need one, or maybe you balked at the initial cost when your lawyer first brought it up, thinking you would be able to work out problems down the line without an agreement in place. The problem is, by the time you’re coming to a lawyer for help in settling this type of dispute, you really could have used a clear set of rules.
From a lawyer’s perspective, it’s always a good idea to get a shareholders’ agreement in place when the business partners all get along. This not only makes the negotiation of the agreement much easier, but it heads off these costly disputes before they even come up. When there are clear rules in place, disputes don’t tend fester as long, relationships are less likely to sour, and you are going to maintain more positive relationships with your business partners than you might otherwise.
Not only can a shareholders’ agreement help in setting the rules around dispute resolution, but it can include mechanisms for succession planning, ensure that shares are bought back in a predictable way for your family if something should happen to you, and provide a clear way to value the business at the point where you might want to move on to new challenges.
Ultimately the shape and content of your shareholders’ agreement is going to be tailored to your specific circumstances. There is no one-size-fits-all agreement that can be applied to each and every business structure. Luckily, the corporate team at Tierney Stauffer LLP has experience with a variety of business types and structures, and we are happy to help craft the agreement that is right for your business.
If you have any questions relating to topics covered in this post, please contact me or one of the other members of our business law group.
Associate – Business Law Group
Disclaimer: This article is provided as an information resource. This article should not be relied upon to make decisions and is not intended to replace advice from a qualified legal professional. In all cases, contact your legal professional for advice on any matter referenced in this document before making decisions. Any use of this document does not constitute a lawyer-client relationship. Please note that this information is current only to the date of posting. The law is constantly changing and always evolving.