Does a Majority Shareholder in a Business Need a Shareholders’ Agreement?

Does a Majority Shareholder in a Business Need a Shareholders’ Agreement?

Yes, definitely.

It is common practice for start-up and growth-stage companies to offer shares to employees, or options to acquire shares. Issuing shares is an inexpensive way, at least initially, for a new company to hire talented people before it can afford to pay market rate salaries, and helps to align the interests of the persons who are issued shares with the interests of the majority shareholders and the company.

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Reasons to Hire a Corporate Lawyer when Buying a Business

Reasons to Hire a Corporate Lawyer when Buying a Business

Buying a business without hiring a corporate lawyer to assist in the purchase is foolish. There are too many complex legal issues to address. Failing to address any of these issues will likely cost you much more than the cost of hiring a lawyer in the first place.

A corporate lawyer with experience in business acquisitions will help you buy what you think you are buying, and will make sure you are not assuming liabilities you know nothing about. For example, some businesses are straddled with debt or have other obligations that mean they should never be acquired at any price (or only in compliance with bankruptcy laws).

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Hiring a Corporate Lawyer when Buying a Business

Hiring a Corporate Lawyer when Buying a Business

Whether you hire a corporate lawyer for the purchase of a business depends on the complexity of the acquisition process and your budget.

Beyond these considerations, it’s a personal decision based on your comfort level in handling the acquisition process.

Corporate lawyers employ a number of evaluation criteria to determine if a company is worth buying. Some businesses are straddled with debt or have other obligations that negate the benefits of the acquisition by the purchaser. Only through a legal diagnostic conducted by a seasoned corporate lawyer can you determine the viability of the firm and the financial costs that you’ll incur through the acquisition process.

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