"Till death do us part." Except when we divorce and spend years
fighting over what's yours and what's mine and who gets the kids
and the dog. Many of these matters are adequately dealt with a carefully
drafted prenuptial agreement. However, the emotional stigma associated
with a prenuptial agreement results in very few actually being entered.
That familiar story applies equally to business formation and breaks up.
Business partners euphorically enter into a new business venture. Thoughts
of long term success and nothing less is all that they discuss. The partners
have a willingness to work out all of their issues and disagreements.
They figure that will be the case forever. Unfortunately, like marriage,
it is not.
The best, and often only, time to think about potential business issues
and disputes is before they happen. In order to draft shareholder, partnership
and operating agreements that will help prevent issues down the road,
it is important to consult with an experienced business lawyer.
Some issues that are rarely considered by laypeople that should be addressed
in a shareholder, partnership and operating agreement include:
- Management obligations and rights
- Financing business operations
- Sale of assets and/or shares of the business
- Rights of partners on death or disability of the other partner(s)
- Rights and obligations to go along or require others to go along with the
sale of the business
- The right to have other businesses and/or to compete with the business
Absent an agreement, these matters are left to the applicable statutes
and common law which rarely adequately deal with the issues. These inadequate
remedies further result in protracted and expensive litigation which could
be avoided through a well-drafted agreement that resolves the parties'
Of course, nobody wants to think about problems when starting a business.
However, that is the time. Since it should be in everyone's best interest
to work through the agreement upfront, the inability to work through the
issues upfront should shed light on what problems may occur in the future.
Contact us to learn more about how we can draft
shareholder, operating and partnership agreements that will protect your rights if things go wrong.
Alex P. Rosenthal, Esq.
Rosenthal Law Group
2115 North Commerce Parkway
Weston, FL 33326