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Posts Tagged ‘50:50 Shareholder Agreement’

How to stay best friends in business

Thursday, February 13th, 2014

Chances are, you are one of the many entrepreneurs who have set up business with your best friend. One of you is the creative person, the other the more managerial type. Between you, you have the perfect skills to run your dream business and before you know where you are, the kitchen table has become your HQ and the business is flying along. “What could possibly go wrong”, I hear you ask? “We have known each other for years and don’t need a formal agreement with each other. There is already enough to think about just running the business. We have set up a limited company so what more do we need?” Shareholders Agreement, Staying Best Friends

The answer is that you need to remember that you two are the foundations of the business. You are investing every spare waking minute on it, possibly hard earned savings too, maybe even re-mortgaged your house. You may not necessarily fall out, but have you agreed what is to happen if:

  • One of you meets the partner of their dreams and wants to sail off into the sunset (keeping up the Valentine’s theme 😆 )?
  • There is a juicy offer on the table from an investor, but one of you doesn’t want to sell up?
  • One of you wants to invest in a major piece of equipment, but your friend disagrees?
  • There is the pitter-patter of little feet and your partner suddenly doesn’t pull her weight anymore..
  • Illness or worse strikes? Should your friend be able to leave his/her shares to her friends and family rather than you have first refusal?

A common issue in the case of 50:50 shareholders is that as time goes by, one person is doing the lion’s share of the work and the other is doing less and feelings of resentment start to creep in.  Suddenly it seems wrong that profits should be split equally and yet you don’t want to risk your friendship.

These are some of the many issues that are covered in a so-called “Shareholders Agreement”. It covers all eventualities that you may encounter while running the business and provides a game plan for you to follow. It may feel hard and possibly pessimistic to have to imagine the “what if’s”, but I promise you that dealing with these issues now, will truly make your business run more smoothly. To this end, I have created the “Staying Best Friends Pack”.  It consists of:

  • A 50:50 Shareholder Agreement template
  • Guidance notes to help you complete it
  • 30 minutes consultation
  • 2 hotline call @15 mins each valid for 6 months from purchase

All of this is now available in our ‘oven-ready document shop’ here