Starting a Business • Part II: More than one owner
If there is more than one owner of the business a buy sell agreement is always required. Every shareholder or partnership dispute that I have been involved in always starts with my client stating, “You know, my partner and I were best friends in the beginning”. If the business relationship goes awry a Buy Sell Agreement outlines the terms of how one shareholder or partner will buy the other out. A buy sell agreement is always best to be negotiated while individuals are still in the best friend stage. Having a buy sell agreement in place avoids costly litigation. No one cares about a contract until everyone cares about a contract because there’s a problem and the frantic dissection of every sentence ensues. We have to advise clients to address the problems before they exist, lest litigation bring the whole machine to a grinding halt.
To be continued … Next week: Part III: Safe-guard your product
Followed by: Part IV: Choosing your Corporate Counsel
Click here if you missed Part I: Laying a good foundation