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  • #991562
    MattEnde
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    Hi, just a quick question. There is lot’s of information online about how to decide what percentage of a business partners should have but there seems to be nothing about exit strategies for these partners.

    For example if a business owner gives 40% of their business to a second person they want invlved in the company what stops that person from signing the contract, turning around and saying they want to leave and would like their 40%?

    When putting together a contract like this do you specify minimum time before a partner can leave the business and things like payment plans to pay them their share?

    Not really sure how it all works so thanks for any help :)

    #1182102
    James Millar
    Participant
    • Total posts: 1,739
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    Hi Matt

    Yes a shareholders agreement will regulate the share transfer (sale) process for any shareholder. There are a host of items that can be documented including forced sale of certain minority shareholders, board discretion on approving a sale etc etc. As long as everything is prescribed clearly and agreed to clearly BEFORE they invest and become a shareholder then generally all outcomes can be catered for.

    I recommend you engage a decent commercial lawyer (there a few members here) and they will help you out. Expect to pay between $1500 and $3000 for something decent and bespoke to your exact requirements.

    Helping build better businesses and better lives with expert financial and taxation advice. [email protected] www.360partners.com.au 03 9005 4900
    #1182103
    MattEnde
    Member
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    Thanks for the reply James.

    #1182104
    NickKaro
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    Hi Matt

    Completely agree with James’ comments above – easier to negotiate these terms prior to issuing/transfering the relevant shares but I have drafted such agreements for parties subsequently.

    The key is to ensure the shareholders agreement is entered into before major events (such as one party wanting to exit) occur.

    Happy to provide a quote if you would like to go down this path, my direct contact number is 0401 154 313 and email is [email protected].

    Regards
    Nick

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