Shareholder or Partnership agreements

Your Strategy is the bedrock for Shareholder or Partnership agreements

In a new startup or small business, you want to ensure a fair relationship between the leadership team, govern how the company is run, set out rights and obligations and if there are shareholders, protect their investment. Do you need a Shareholder, Partnership or any other form of Agreements? And how does this vary from a Business Plan. What about all that other stuff you hear about Vision, Mission Statements and values….Words, words, buzz words and jargon perhaps. Or are they? Shakespeare as ever, summed it up: “Words without thoughts never to heaven go.” However more positively, George Byron wrote, beautifully: “A drop of ink may make a million think.” To cut to the chase. Nick Hixson, from Hixsons Business Enablers, where I head up the marketing, sums it up perfectly in his helpful blog, What Shareholder Agreements Are Really For. Nick, with nearly four decades of experience advising small businesses, stresses the need to agree your strategy, vision and mission. And with his clients, he seeks to regularly revisit these, as the business develops, and situations change. The issue with a Shareholder Agreement, or in fact any type of business agreement, is that they are written at a specific time, lawyers help you in good faith, but as Nick writes in his blog, their involvement stops when the agreement is signed. Or it usually does on a routine basis, certainly. Create your strategy first, it is the bedrock for shareholder, partnership in fact any appropriate agreement. The strategy, vision and mission, agreed by the leadership team generates growth and innovation. And this is something that needs to be revisited and sustained for success.

A Toolkit

At Dorset Business Angels, the dragons den (if you like) for Dorset, where I am a founder director, a question always asked of all presenter pitches, is about the people running the business. Who is in the CEO, the key players, shareholders, is there IP and what happens if someone leaves? I covered the pitch presentation itself in a previous article, What investors want to hear. This was in essence about knowing you are solving a real problem, your market, knowing your target customer, and having a clear ROI for investors. Now let’s focus on what a startup or small business needs on its growth journey. To keep it simple:

A Meeting of Minds

I’ve been involved with new businesses, where partners or directors say: “hadn’t we better have a contract, partnership or some kind of shareholders agreement?” I’m now very clear, having worked with a lot of accountants and especially with Hixsons, the need is to get your ideas organised first. It’s about your vision, mission and strategy: simply, what you want to do, with whom and for who. It’s the same as when you go to get a service from a supplier. Such as a website. The clearer your brief to the supplier, the better job they do for you. And if you and your fellow partner(s) and director(s) can agree your strategy first, it makes documentation much simpler. I like the phrase used in law often: meeting of the minds, (also referred to as mutual agreement, mutual assent or consensus ad idem). It’s is a phrase in contract law used to describe the intentions of the parties forming the contract. It refers to the situation where there is a common understanding in the formation of the contract. Create your strategy first, it is the bedrock for shareholder, partnership in fact any appropriate agreement. The strategy, vision and mission, agreed by the leadership team generates growth and innovation. And this is something that needs to be revisited and sustained for success.

Peter Eales BA Hons Chartered Marketer FCIM FIDM
Founder Director Dorset Business Angels
MD o i solutions limited

Posted in Blog.