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Category Archives: Multiple Owners

The Complexities of Partnership Agreements

October 5, 2017

Partnership agreements are rarely as simple as people think they are. I spent a lot of time working on partnership agreements. What I find interesting is a lot of people think partnership agreements are simple. Give me a standard partnership agreement. We’re just doing a normal partnership agreement. These are the types of statements I might hear when somebody’s calling us, but there is a lot more complexity to partnership agreements.

Fundamentally, every partnership is different. There’s different understanding and you need to dig in and understand that dynamic.… Read the rest

Where’s the Emergency Exit?

September 18, 2017

We do a lot of work crafting partnership agreements. If you’ve been a frequent reader of our blogs, you’ll know it’s something we talk about often in length. But one of the keys to partnership agreements is to have an exit strategy. So often, when we have problems in partnerships, it’s because the partners have decided to go different directions and there’s no way for one of them to safely exit without fighting with the other. However, I’m a big fan of partnerships, and I believe partnerships can add lots of economic value.… Read the rest

When a Business Partnership Turns Out To Be Not What Was Expected (Part II)

September 15, 2017

Shortly after Hogan was brought in as a 1/3 owner of Turbine Asset Holdings, LLC (“TAH”), he began helping TAH with business opportunities using his contacts and expertise. [1] One of those business opportunity involved Pratt & Whitney (“Pratt”), which was expected to be a very significant inventory management opportunity worth at least $80MM of a net profit.  Hogan led the daily discussions and planning with Pratt and kept Glassman informed of the progress. Meanwhile, Glassman started contacting banks to finance the deal. … Read the rest

When a Business Partnership Turns Out To Be Not What Was Expected (Part I)

September 14, 2017

The R. Shawn McBride Law Firm, PLLC, frequently writes about a partnership, LLC, and multi-owner entities.  Mostly we have discussed cases or situations where business partners start out on good terms, have a spirit of teamwork and sincerely eager to start a partnership, only to see their relationship weaken over time due to disagreements over management, ownership, or other issues.  But what if there is no intent to be business partners in the first place

AerReach Aero Space Solutions, LLC v.Read the rest

How to Protect Yourself When Things Fall Apart (Part IIII)

September 13, 2017

In Mizrahi v. Cohen, [1] a dentist and an optometrist formed a limited liability company for the purpose of the construction and operation of a mixed-use building in which they intended to set up their individual offices.  They did not have an LLC agreement at the time the LLC was formed but it was implemented a few months later when they purchased the land because the lender required an LLC agreement. The attorney who represented both members at the closing drafted an LLC agreement. … Read the rest

How to Protect Yourself When Things Fall Apart (Part III)

September 12, 2017

In Saunders v. Firtel, as in Cline v. Grelock, the two business partners were close friends. [1] Firtel was the sole owner of Adco, a pharmaceutical sales corporation and Saunders worked as a sales representative for a medical supply company.  In 1986, the two agreed to enter into a formal business relationship which included Saunders to obtain a 49% shareholder interest in Adco and to become an employee of the company.  This written agreement allowed for both of them to devote their time and efforts to the business and split an equal compensation and fringe benefits but also did allow Firtel to spend substantial time away from the business. … Read the rest

How to Protect Yourself When Things Fall Apart: Business Partnership, Disagreement, and Dissolution (Part II)

September 11, 2017

In Cline v. Grelock, [1] the business partners were two-lifetime friends who started a towing business called American Asset Recovery, LLC (“AAR”) d/b/a Hound Dog Recovery.  To start the business, Grelock and Cline personally guaranteed a bank loan for AAR to buy a motor vehicle for the business.  The business did not succeed. It had significant debts and did not clear a profit.  The relationship between the two co-owners also deteriorated to the point where continuing the business was not an option. … Read the rest

What to Do When a Business Partner Withdraws? Interpretation of Payout Provisions Under a Partnership Agreement

September 7, 2017

If you have been reading our blogs, you know that we write and speak often about countless issues involving business partnership, including the four Ds (death, disability, divorce, and disagreement).  Although many business owners starting a new business may think it won’t happen to them, the truth of the matter is that businesses are certain to experience at least one of them if they are in business long enough.  Disagreement, in particular, typically will happen and can cause the withdrawal of one or more business partners at an unexpected time, and when that happens, figuring out the financial aspect of the breakup can be messy.… Read the rest

All postings are intended to be planning tools to familiarize readers with some of the high-level issues discussed therein. No posting is intended to be a comprehensive discussion and additional details should be discussed with your transaction planners including attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. This article should not be treated as legal advice to any person or entity.