Shareholders together in business: will they still love each other tomorrow?

People eh?  Shareholders together in business have different personalities.  Different pressures in their lives.   Different work ethic.  Different propensity for risk taking.   Even different long term plans for the business (that will definitely be a tricky dilemma at some point…).  Future threats to the health of a shareholder working full time in the business and which could affect their capacity to contribute to the business – imagine what a drain that could be or the implications for the shareholder who suffers long term illness and needs to sell his shares. 

Such differences, one way or another, will arise in the life of a business and could (and frequently do) tear apart the working relationship between the shareholders, damage the business and put enormous strain on the shareholders’ and their families UNLESS there is a fallback position giving a route through the problem and enabling the shareholders to deal with the situation.   

Worryingly these scenarios, with resultant rapid breakdown in shareholder relations – such that they are unable to arrive at a sensible and speedy resolution – are far, far more common than many business owners think.  Even the savviest business owners can be blind to the chaos that might be just round the corner.   After all, stuff happens.   

The problem will boil down to trying to agree a way out of the mess with each shareholder wanting a different solution unless there is a ‘this-is-what-we-agreed’ fallback solution. 

Yet, the fallback solution is so easy: a shareholders’ agreement with a pre agreed fair plan for dealing with such life events.  Without this the shareholders can be stuck in a business wrecking cycle and the pressures on the business, the business owners and their families can utterly be soul destroying.   

It’s madness. – all for want of a shareholders’ agreement…  

Secure the Business

You need to make sure that the necessary processes are in place to deal with the ‘what ifs’ in life and business.   It is essential to have clarity and the proper protections in place for you, your family and your business – a process that falls into place when the ‘what ifs’ happen.

No Obligation Call

If you would like to have a no obligation chat as to how to protect both your business and your family then I am always happy to talk:

Tel: 01225 287516 or e mail: jane.latham@lcls.co.uk

Sad Sally

What happened to Ted’s shares in his business when he died…

You would be forgiven for thinking that when a shareholder dies and the will bequeaths shares to the spouse that that would be the end of the matter.

Unfortunately, it’s not so straight forward and a family can be left with real difficulties. 

This is about one such family – Ted and Sally and their children.

Harry and Ted were 50% shareholders in the business they founded.

Ted died suddenly and unexpectedly. He left behind his wife Sally and 2 young children. He had bequeathed his shares to Sally who was left reeling from Ted’s death but also from financial pressures as Sally need to ensure stability for the children and stay in the family home.

Sally wanted to sell the shares to Harry and he jumped at this but pitched in with a low offer.  And that is when things got really messy.  Sally was under increasing financial pressure but knew that the price Harry offered was low.   

Sally tried to negotiate but Harry would not budge.  She tried to hold fast but Harry’s response was to ignore her.  Sally could not mentally or financially endure the pressure and felt she had no choice but to agree the price Harry had offered.

If only Ted and Harry had had a shareholder’s agreement in place.  There were so many pragmatic and fair solutions that could have been pre agreed and dealt with in a Shareholders Agreement and Ted’s family would have been looked after fairly as Ted intended.

Secure the Business

You need to make sure that the necessary processes are in place to deal with the ‘what ifs’ in life and business.   It is essential to have clarity and the proper protections in place for you, your family and your business – a process that falls into place when the ‘what ifs’ happen.

No Obligation Call

If you would like to have a no obligation chat as to how to protect both your business and your family then I am always happy to talk:

Tel: 01225 287516 or e mail: jane.latham@lcls.co.uk