If you are a business owner or founder and you have a partner or co-founder, a written agreement between you is flat-out mandatory — even if your businessmate is a spouse, a sibling, or your oldest buddy. And in our experience working with entrepreneurs, an agreement prepared by a lawyer in collaboration with the cofounders not only made disputes easier to resolve: it kept the peace.
Of course, for multi-owner companies, a set of by-laws (for a corporation) or an operating agreement (for an LLC) is a legal near-requirement. But an effective agreement goes beyond the minimum requirements.
When we draft a co-founders’ agreement, we always ask clients questions to help set the terms, such as:
✅ “How do you guys make decisions?”
✅ “Are there specific areas where you all trust one cofounder’s discretion?” (Like where one person is “marketing” and the other is “finance”)
✅ “What if one of you wants to leave, or dies, or becomes disabled, or gets divorced?”
We also specifically list the kinds of major decisions that will require a consensus or even unanimity among the cofounders – for instance, any decision to add an investor, or take out a big loan, or to spend money above a certain dollar threshold. And we typically include a multi-step dispute resolution provision.
For this kind of custom, corporate prenuptial, it won’t do to download something from the Internet or trust generative AI.
To establish and cement a long-term, healthy and collaborative relationship among cofounders, it’s well worth the money to find a lawyer skilled and experienced in the operations of small businesses, and get a bespoke agreement that’s a perfect fit for your business and your cofounders. And that lawyer should make it clear from the outset whom they represent.
Let us know if we can help!
