The Start Up – The Prenup – Introduction


Unless you’re going it alone, one of the most important documents you will need to enter into is the agreement that defines the relationship between you and your partner(s).  Think about it, most marriages start with the couple being “in love” and no one is really paying attention to the realities of living with another person.   But as time goes by (and the blinders come off), who doesn’t get angry about the dirty underwear on the bedroom floor, the snoring or just the daily grind of living with each other’s habits?  And remember, for most of us, we spend more “awake” time with our business associates than we do with our marriage partner. So, what I hope is becoming clear, is that each of you will be better off if you define your roles in this new venture. You must consider both the ongoing management and the potential “divorce”.  Just some random statistics to drive the point home — the divorce rate in the US is somewhere between 40-50%; the failure rate for a new business is about 70% over a 10 year period; and while there are no verifiable statistics on whether those businesses that are successful have the same partners they started out with, we need to remember Mark Zuckerberg (Facebook) and Steve Jobs (Macintosh/Next/Apple) (yes, you can Google all these statistics as well).  Bottom line, spend some real time (and money) to make sure you don’t end up in very expensive and emotionally draining litigation over how to break up, exit or wind down the business. Depending on the form of organization you have chosen (see, The Company) you will need to enter into a Shareholder Agreement, Operating Agreement or Partnership Agreement.    Each of these agreement deals with some universal issues (e.g.  management of the company) and some unique issues (e.g. taxation).

Next installment, Universal Issues – Management of the Organization, and remember, ALWAYS CONSULT AN ATTORNEY FIRST.

About ebizlawyer

Laurence Associates has extensive experience in outsourcing, internet law, software, computer systems, data protection, information security, privacy and corporate services both from the customer and vendor perspective. Elaine Laurence, the founding Principal of Laurence Associates, has unique expertise in understanding and handling transactional issues facing financial services institutions and small businesses. For more information visit my website at:
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