Some people in Ohio and nationally can rightly claim to be married twice: to their spouse and to their business partners.
One informative overview on small to medium-sized companies essentially notes that, duly stressing that there is much in common between wedlock and many business partnerships.
And that commonality, notes the article, begins at the very outset of a business, with partners — like spouses — viewing their union as lasting. And given that view, business associates will readily agree “to subsume their personal goals, link their futures and remain faithful to each other” for the sake of long-term prosperity.
That’s well-intentioned, of course, but the truth is that businesses in Ohio and across the country are, like many marriages, fated to end prematurely and in a manner unanticipated by the persons involved.
And that is why a properly drafted and timely executed shareholder agreement can be as important for business players as a prenuptial agreement is for many about-to-be spouses.
What can a shareholder agreement do?
The above-cited business primer notes that a typical shareholder agreement will set forth “the responsibilities, expectations and benefits of each partner, and provide a formula to undo the relationship” should things head irreparably south or simply change in some major way.
And that happens, of course — all the time.
When it does, it can be tremendously valuable for business principals to have an executed contract on hand that thoughtfully considered such possibilities and that now provides for a process to resolve them.
Obviously, a business will spend a bit of money enlisting the aid of a proven commercial law firm well versed in contract matters to help negotiate and draft a sound shareholder agreement.
The aforementioned business piece notes, though, that the outlay “will be an insignificant cost if it prevents or limits a dispute.”