Small, private or family owned companies often operate as "quasi-partnerships", relying on the closeness of the shareholders' relationships to solve any problems which may arise. However when problems do arise, they are liable to strain or even destroy such relationships.
We can help you to draw up a shareholders agreement which will anticipate and provide solutions to deal with 'what if' or worst case scenarios. This can save you significant time and money and might also highlight areas where your expectations are not as similar to those of your business partners as you imagined.
We discuss your key objectives of being in business together. We review each party's contributions to the business in terms of time, effort, ideas, contacts, intellectual property, cash, equipment or premises and the terms upon which those contributions are made, e.g. through a loan, lease, licence, or preferred shares etc. We then look at what each party expects to gain out of the business in terms of salary, dividends, business opportunities, and returns on capital.
Our advice covers management, control, and minority protection and how things might change in the future in terms of developments in the business, the introduction of new shareholders or the departure of existing shareholders. This usually involves creating 'pre-emption' rights on the transfer of shares and agreeing 'permitted' and 'obligatory' transfers with possible 'good-leaver'/'bad-leaver' consequences. The shareholders should consider their exit strategy, perhaps introducing "drag along" and/or "tag-along" rights in the event of an offer by a third party. If a deadlock could arise, we would consider how best that should be resolved.
A shareholders' agreement is a worthwhile investment for your business now, as well as valuable insurance for the future. It can also be important for protecting the rights of investors in the Company.