Most businesses start on trust and good intentions. Two or three people go into something together, everyone’s getting on, and putting a formal agreement in place feels a bit like planning for a divorce before the wedding. It’s uncomfortable, so it often doesn’t happen.
The trouble is that goodwill doesn’t survive contact with real money, real disagreement or real pressure. What happens when one shareholder wants to sell and the others don’t? When a partner stops pulling their weight but still owns a third of the business? When a joint venture partner on a development runs into financial trouble halfway through the project? Without an agreement, you end up arguing about what’s fair, usually at the worst possible time to be arguing about anything.
We draft agreements that set the rules while everyone’s still getting along, so there’s something workable to fall back on when they’re not. That means dealing properly with ownership, decision-making, funding, transfers, deadlock and exit. Those are the issues that tend to cause disputes between co-owners, and they’re the ones we cover.
Start with who owns what, and how. That might be straightforward, equal shares and equal say, but it rarely stays that way once people put in different amounts of money, time or expertise. We record ownership clearly and set out how it’s meant to work in practice, including unequal contributions, sweat equity, and stakes that are meant to shift over time, such as a bigger share once someone hits a milestone.
Some decisions should need everyone’s sign-off. Others shouldn’t need a meeting at all. The agreement sets out which is which: what a majority can decide, what needs unanimous agreement (selling the business, taking on debt, bringing in a new owner), and who has the final say day to day. Get this wrong and you either grind the business to a halt or hand control to someone who was never meant to have it.
Businesses need cash, and not always in proportion to who owns what. The agreement deals with how future funding is raised, whether contributions are pro rata, what happens if someone can’t or won’t put more money in, and how that affects their stake. Left unaddressed, this is one of the fastest ways for an owner to end up diluted, resentful, or both.
At some point someone will want out, want to bring in a new partner, or get an offer they can’t refuse. The agreement controls who an interest can be sold to and on what terms: pre-emptive rights so existing owners get first refusal, and drag-along and tag-along rights so a majority sale doesn’t leave a minority owner stuck as a partner to someone they never chose.
Two owners, fifty-fifty, and they don’t agree. It happens more often than people expect, and without a mechanism to break it, the business can grind to a standstill while everyone waits the other out. We build in a way through it: an independent casting vote on limited issues, a valuation and buyout process, or a “you name a price, they can take it or match it” mechanism (sometimes called a shotgun clause). The point isn’t to make deadlock pleasant. It’s to make sure it doesn’t take the business down with it.
People leave businesses. They retire, they fall out, they get a better offer, or their circumstances change. The agreement sets the process before any of that happens: how an exiting owner’s interest is valued, who has to buy it, over what timeframe, and what happens if the parties can’t agree on price. Sorting this out in advance is a lot cheaper than sorting it out in the middle of a dispute.
Everything above applies just as
much to partnerships and joint ventures as it does to companies. If you’re
structuring a joint venture for a development or construction project, the same
issues turn up under different names: who contributes what, who makes the call
on variations or delays, what happens if a JV partner runs into financial
difficulty mid-project, and how the venture unwinds once the project’s
finished. We work across all three structures and will tell you which one
actually suits what you’re trying to do, rather than defaulting to a company
because that’s the easy answer.
