If you co-own a business with someone else, or if you are in the process of setting up a business venture with someone, then now is the time to think about either a shareholders agreement, partnership agreement or joint venture agreement (also known as ‘Co-ownership Agreements’)
Co-ownership Agreements are confidential ‘living’ documents that set out the rules around governance & conduct of the co-owners of a business. One of the most common issues dealt with in Co-ownership Agreements are buy/sell arrangements in the event that one of the co-owners wants to, or is forced to leave, the business and these are discussed in more detail below. However, there are many other issues that can be addressed in a Co-ownership Agreement, such as:
These matters are critical to the success of a business and they should form part of the initial discussions between you and your fellow co-owners, so that you have a solid foundation from which to build your business together.
All business relationships come to an end for all sorts of reasons, whether it is a result of a breakdown in the business relationship or the death or retirement of one of the co-owners. However, experience tells us that when you are in the throws of creating a new joint business venture, with all the positive energy and enthusiasm that entails, this fact is all too often forgotten with little thought how that reality would play out.
In our experience, it is better to plan for these sorts of events, so that if it occurs there are processes and systems in place that help to minimise disputes and disruption to your business. This will allow you to deal with the changes to your business with as little disruption as possible, which has got to be good for the ‘bottom line’. Set out below are some examples of the types of buy/sell events & issues that need to be considered:
If you’re starting out in business with others or, if you think that your existing co-owned business would benefit from a discussion with your current co-owners around these issues, then we encourage you to give us a call, so that we can discuss whether or not a Co-ownership Agreement is right for you.