We are a niche, technology-driven, sector-focused Research & Analytics firm. We are based out of Jersey City, and have a full service Delivery Center in India. In the last 2 years, owing to exceptional staff talent and quality delivery, we have serviced repeat clients across the US, Europe & Asia. We are thinking of raising funds by selling his share, but we're not sure if that's the right way out. What are our best options in dealing with this?
I have been involved in many private companies from startups to large cash flowing enterprises. Lets start with what many companies find useful at the outset-negotiate and execute a shareholders agreement that establishes rights and responsibilities of the founders in case of events like this. So with respect to the founder, and assuming you lack a shareholders agreement, you are limited to the options you can negotiate with him. Repsonding to your question of raising funds by selling his share, that essentially competes with capital for the company. The best solution, assuming capital scarcity, might be to let the founder stay in place with his shares, and make an agreement with him to give the remaining founders the right to vote his shares. If you would like to discuss this further please feel free to get in touch.
Answered 9 years ago
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