We have too often been involved in business sales and business valuations because things have gone pear-shaped in a business partnership and a shareholder or partnership agreement doesn’t exist or doesn’t address the demise of the business arrangement forged in the trenches of the war for customers / staff / premises ………..
So many business partnerships start off as a couple of mates / old work colleagues having a good idea and just kicking off to see how things might pan out. Statistically we know most of those fail but some don’t. Happy Days. Problem though is that the inauspicious start often meant no agreement on how things were going to play out when it was a real-live-business or if someone wanted to get out.
There might be an age difference. There is often a motivation difference. There can even be a ‘scary wife’ difference!!
Partnership agreements should consider inter alia:
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Who has what roles within the business
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What each partner and their family will be paid
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Financial reporting
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How decisions are made
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What happens if the decisions are deadlocked
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How new funds are raised
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How strategy is set
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What hours or contribution the parties put in
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What happens when one party wants out
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How the business will be valued to take out or bring in a partner.
Keep a copy of the agreement at the ready and another at the solicitors.
While you’re there get some good advice on the structure that’s best employed i.e. partnership v company. The Accountant will also have plenty of war stories to relate in this regard.
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