“Complimenting our in-house team, Jane’s specialist knowledge ensures we can offer our clients a great service for company sales and acquisitions. Completely confident in her methods and abilities, Jane is efficient, fair and responsive. Always keeping our clients’ best interests at heart, we know Jane will be on top of each and every case - a fantastic, safe pair of hands.”
Simon Cowell, Solicitor, Harland & Co
People start working together, by and large with the best intentions, but for a variety of reasons people fall out. How you handle this should be enshrined within your company documents, if not it’s going to get awkward for everyone…
It is not uncommon for fellow shareholders, Limited Liability Partnership (LLP) members or partners to fall out and find that they are unable to work with each other for the benefit of the company or business. Of key importance is to make sure that you have documents in place from the outset which help with any ‘separation process’ should it arise. Unfortunately it is very common for us to see clients who find themselves in just such circumstances but where exit strategies have not been incorporated into a suitable Shareholders, LLP or Partnership Agreement, so what can they do?
1. Is the ‘falling out’ amicable or not?
2. If it is amicable do each of you know what you want to achieve despite what your Shareholder Agreement, Partnership Agreement or Limited Liability Partnership (LLP) Agreement says?
3. If it is not amicable do you have an exit route for one of you in your Shareholders Agreement, Partnership Agreement or LLP Agreement?
4. Do you have the resources to fund the purchase of the other shares, partnership share or LLP share? If not is there someone else who wants to come into the business and buy those shares, partnership share or LLP share?
5. If it is not amicable and you do not have a Shareholders Agreement (or suitable provisions in the Articles of Association), a Partnership Agreement or an LLP Agreement and do not have the resources to buy the others out then you only have three options:
i. Stay as you are (this could be uncomfortable and bad for the business)
ii. Close the business (this is such a waste if the business is successful)
iii. Agree to enter into commercial mediation to hopefully find an agreed solution which can be financed.
And remember…
Once a solution is found and the ‘problem’ shareholder, partner or LLP member has gone, if there is still two or more of you in the business and you don’t already have a Shareholders, Partnership or LLP Agreement then have one prepared by your business law solicitor, so that if the situation arises again you have an exit strategy in place.