Start Your Business on the Right Foot:
Sign a Founders’ Agreement

When establishing a new start-up business, it’s easy to get caught up in the excitement. You and your trusted friends have come up with an innovative new good or service, and collectively you’re pushing forward to get it to market as quickly as possible and begin to generate revenue sure that your mutual trust and goodwill will ensure your mutual protection.

Yet, this period is the key time to prepare for the future and lay the ground for your future mutual profit.

There are numerous issues that need to be considered and agreed in a formal fashion between yourself and your co-founders to ensure that key governance and financial matters are clearly determined before proceeding any further. Aviv Lazar & Co is fully equipped to advise and guide you through this process and produce a bespoke Founders Agreement uniquely tailored to you, your associates’, and your business’ specific circumstances. There are a number of key areas that will require agreement:

1. Financial Issues

One of the key issues to determine from the outset of your business relates to the businesses’ financial matters. Who owns the company and enjoys the right to receive a share of payment on sale and in what proportions? Who may share in the profits of the business? Are any of the founders to be salaried? The only way to guarantee the agreed outcome of these issues is by recourse to a Founders Agreement.

2. Governance Issues

Governance issues should also be taken seriously at this early stage. Who among the founders will be permitted to determine the future of the company such as when the company should be sold? A CEO on behalf of all? A Board of Directors? A single vote for each of the founders? All of these issues need to be clearly laid out in a Founders Agreement and decided before any issues may arise. What if any disputes between the parties arise? A Founders Agreement can detail how they should be settled ahead of time.

3. Intellectual Property Issues
It is likely a considerable amount of your company’s future value shall be in its Intellectual Property. This issue grows out of the Governance Issues detailed above. Who will be the owner of the IP rights? Who will have the right to determine it should be sold or licensed to third parties?

Here at Aviv Lazar & Co we are passionate about providing quality legal care to all of our clients and would dedicate ourselves to crafting the most appropriate formulations for your complex business needs. Contact us today to discuss your needs in greater depth.

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