Nobody wants to bail on a business they built from the ground up. But some circumstances, like enough success to be acquired or a necessary shift in the company's strategy, may require a founder to step aside.
Finding yourself in this situation can be heartbreaking or a blessing, but either way it can also be legally complicated. And you may need to be careful to protect yourself, your finances, and your future if you plan on leaving the company you've founded.
If you're selling your company, you've got some things to worry about beyond just the sales price. First, you'll need to prepare for the sale:
- Get Your IP in Order -- You can increase the value of your business by protecting your intellectual property with patents, trademarks, and copyrights;
- Get Your Books in Order -- You'll need to insure that all of your incorporation documents and accounting is tidied up;
- Get a Business Sales Broker -- You may think you can handle it all yourself, but getting a business broker will help the sale go smoothly and probably fetch you a higher price;
- Get a Contract Drawn Up -- Selling a business is not a handshake agreement -- make sure you have a sale contract ready to go.
After that, it's all about negotiation. Speaking of that sale contract, though...
Break Out Your Clause
When a founder leaves, the purchaser or those left behind want to know she didn't just walk off with company secrets in order to join or start a competitor. That's why many business sale contracts or employment agreements include nondisclosure or noncompete clauses.
While these clauses and agreements are commonplace in the business world, they are not always enforceable. So review any employment documents you've signed, and perhaps have an attorney review them as well. That way you'll know just how bound to your company you are.
Not literally, as some of your options may not have vested. But knowing where your stock in the company stands may affect your exit strategy. Find out how many of your options have vested, what the strike price is, and what the total purchase price would be for the vested options. You may want to leave your company, but you don't want to leave money on the table.
If you're thinking of selling your company or are otherwise leaving the company you founded, you may want to talk to an experienced business attorney about your options.
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- Browse Business & Commercial Lawyers by Location (FindLaw Directory)
- Ending a Business (FindLaw's Free Enterprise)
- Is My Business Worth Selling? (FindLaw's Free Enterprise)
- Noncompete Clauses Are Everywhere, but Does Your Business Need Them? (FindLaw's Free Enterprise)