This week on this new episode of Get to the Contest Small Business Podcast, we are glad to have Michelle Aitken, Senior Associate with Aubrey Brown Lawyers. We talked about the importance of a shareholders’ agreement and more. Here are a few takeaways from my chat with Michelle.
1. Spend the money to get the agreement done up front.
Businesses with multiple shareholders will be wise to invest on drafting an agreement upfront, while the business is just starting. Having a shareholders’ agreement will save you a significant cost down the line and decrease the chance of unnecessary stress if things don’t go as planned. The simple act of preparing, setting the rules and expectations will set a standard to your business partners and will ultimately help in strengthening the business relationship.
2. Get things done professionally.
Michelle talked about the importance of getting these things done professionally and really tailoring it. These agreements are not “one size fits all” type. Make an effort to speak to a good lawyer that can give you a solid plan and get this on paper and documented.
3. Make sure all parties are protected.
No one wants failed relationships in life or in business but these things happen to the best of us. It is best to anticipate different scenarios and draft an agreement from the very beginning as stated in number one. The most important thing in documenting this type of agreement is making sure all parties involved are protected. Make sure there are rules in place so that when a partner decides to walk away, planned or unplanned, all can move on peacefully and cordially.
4. Review your buy or sell agreement regularly.
Once a year, make sure to talk to your accountant and review the existing agreements. Review and see if the terms are still adaptable to the times. Have it on your checklist on your annual meeting with your trusted accountant.