At Lex Nova, we understand what it means to build generational wealth and to use it to advance both public and private ends. Our award-winning attorneys have been recognized by such outlets as Best Lawyers in America, Martindale-Hubbell, SmartCEO Magazine, Worth Magazine, and SuperLawyers for our demonstrated track record of helping families plan for, build, and manage success over generations. We can and do help to:
- Developing asset-protection and wealth management strategies that simultaneously protect our client’s wealth while minimizing tax liability and other administration costs;
- Make investments in a variety of private companies and projects, including advising on various deal structures, investments, and terms while ensuring their rights are properly protected from down-side risk;
- Manage charitable contributions to ensure maximum impact and minimizing tax liabilities, including establishing various charitable enterprises such as private foundations, nonprofit corporations, and other related activities; and
- Implement wealth transfer strategies that minimize tax liabilities and ensure that a family’s wealth is protected for generations to come.
Business partnerships begin and business partnerships end. Like a divorce between husband and wife, the ending of a business partnership can range from friendly to bitter. Only lawyers win in a bitter business divorce. The business itself usually suffers, not to mention the lifelong personal relationships.
Our business and corporate lawyers can help you plan for and navigate the end of a business partnership, whether that takes the form of a buyout, a separation of one business into two, or some other form. We will represent you forcefully in litigation if necessary, as forcefully as the situation calls for. For most clients, however, a friendlier separation is better. With deep knowledge of the laws and deep experience structuring creative solutions, we can help.
Shareholder, Partnership, and LLC Agreements
Without exception or exaggeration, creating a good agreement among the owners of the business is the most important task for the owners and their lawyer. And the time to create it is right away, as the business is being formed.
We have seen far too many businesses and relationships ruined for lack of a good agreement. You are family members or lifelong friends who are sure nothing could go wrong? Think again. Courts are filled with bitter fights among former friends and family members who thought just as you are thinking now.
Here are some key questions our business and corporate lawyers will help you address:
- Ownership Percentages: Ownership percentages, the manner in which profits will be divided, and the power to control the business are three separate things. A good agreement deals with these issues separately.
- Capital Contributions: A good agreement will establish how much money each owner will contribute, both at the outset and in the future, and lay out the consequences if an owner fails to contribute his, her, or its share.
- Distribution Waterfall: Ownership percentages don’t necessarily dictate how profits are distributed. For example, maybe the owner who contributed capital should get her money back first.
- Management and Control: Without a clear agreement, the owners of a business can find themselves arguing over control. Should all decisions require unanimous consent? Should decisions be made by the majority, with only designated major decisions (g., selling the business) requiring the vote of the minority? Most important of all, can two owners fire the third?
- Breaking Deadlocks: Of all the things that can happen to a business, the worst is a deadlock. A good agreement gives the owners a way out, without lawyers and judges involved.
- Compensation: Profits are one thing, compensation is something completely different. In most businesses, the owners should be compensated for what they do.
- Time Commitment: Many businesses start as a side gig in the garage, with the owners working part time. They should write down how much they expect one another to work.
- Restrictions on Competition: How would you feel if your partner left and opened shop across the street? A good agreement balances the interests of the individuals and the business.
- Buy-Sell Issues: Too many agreements focus only on the death of an owner. Far more likely during a five-year business horizon is that an owner becomes disabled, is divorced, becomes insolvent, or just quits and heads to the beach. A good agreement covers all these possibilities.
Talking about these issues can be uncomfortable – that’s because they’re so important. We have talked them through many, many times before and can help create a good, lasting business agreement.
One of the most successful ways to begin a new business is with the help and guidance of a franchisor with a proven formula for success. We have reviewed many, many franchise disclosure packages and assisted prospective franchises to negotiate the Franchise Agreement and understand the implications and importance of it provisions. Will you have an exclusive territory? Will you be required to purchase supplies from the franchisor at a burdensome markup? Can you monetize your successful business by selling it to a successor franchisee? Can you renew? Are there hidden costs?
In theory, franchises provide a way for entrepreneurs to launch new businesses using a proven model. In practice, too many franchise arrangements are more like employment relationships where the employee provides the risk capital – or even like indentured servitude. We can help you distinguish the good from the bad.