It Won’t Happen To Us! We Know Each Other – We Don’t Need an Agreement
By Felicity Simpson
7 March 2018
Whether you are establishing a new business venture, buying an existing business or operating an established business - the structure and agreements which govern the business (or for many small businesses the absence thereof) can significantly impact the value of your interest in the business, now and into the future.
The material considerations relevant to your interest, whether it be a property development, joint venture, partnership, firm, unit trust or Company are similar.
For many small business owners, the importance of these factors are often not appreciated until it is too late – for example, when a joint business owner discovers there is no satisfactory solution to their dispute with their co-owner, other than to go down the path of often costly litigation, with no guarantee of an acceptable outcome.
TLFC Law has over 40 years’ of experience in, and has been instrumental in, the sale and purchase of businesses, the structure (or restructure) of businesses, fundraising for start-up enterprises, dismantling of businesses where the owners have reached a deadlock and the sale or purchase by one owner of another owner’s interest. Our years of experience have provided us with a well-established set of protocols which we recommend clients consider wherever there are two or more parties involved in any business. These include:
- Capital contributions, loans, distributions and how to address disproportionate financial or other contributions.
- Exit Strategies – ranging from a default position if the parties become deadlocked, to sourcing third party buyers or pursuing an initial public offering.
- Decision Making – by who and who holds the balance of control.
- Key Person Insurance and how the death or total and permanent disability of a key person may impact the business, the key person’s value in the business and their family’s interest (if any).
- First and/or Last Rights of Refusal for the interest holders to buy out their co-owner.
- The introduction of new interest holders to the business.
- Managing Director appointments, authorities and remuneration.
- Intellectual Property Protection and ownership – including business name, trademark, domain name, patents, designs, copyright etc.
We will work with your accountants to achieve a balance of the financial and legal considerations which meet the needs and expectations of all parties.
For all business and contractual issues please contact a member of our Business Law Team.