KNOWLEDGE CENTRE

If you’re drafting a shareholder agreement, think carefully about whether a shotgun clause is right for your situation. Because once you pull that trigger, you’d better be prepared for whatever comes next.

Tag-along or drag-along? Most shareholders have no idea what these mean until it's too late. When a majority shareholder wants to sell, minority shareholders can get left behind, stuck with new owners they never chose, or forced to sell at terrible terms.

In my experience, most business relationships show cracks within 12 to 24 months. That's when you realize the other person isn't the right fit. That they're—let's be honest—not a Monet. And yet, most entrepreneurs wait until after that point to think about shareholder agreements.

After years of practicing law, it still surprises me that the number one reason shareholder agreements fail is that most companies simply don't have one.