Every business needs a legal and business structure, both for day-to-day operations as well as a business exit strategy. A corporation and a limited liability company are the most common legal structures used by entrepreneurs and new business owners. Both require well-drafted agreements, called the LLC Operating Agreement or a Corporate Shareholders’ Agreement.
A business exit strategy is often associated with building the company with a future sale in mind. However, there are other reasons for a business structure, one that contemplates not only business operations and insulation from liability, but also provide for sudden departures of shareholders or members due to death, illness, or withdrawal.
When building a team-managed business, your business structure and exit strategy are all the more important to properly implement. There are differing, but equally important considerations for both the family-owned business, as well as the partner/investor business. First, I’ll share the key points to remember to button up the legal structure for the partner/investor business.
FIVE TIPS TO FUTURE PROOF BUSINESS STRUCTURE
A limited liability company requires a well-crafted LLC operating agreement. The corporate structure has a similar agreement called the shareholders’ agreement.