Businesses co-owned by friends or family members commonly come unstuck when relationships between owners start to fray. Drawing up a shareholders' agreement is the best way to prepare for the worst.
There are many reasons for wanting to set up in business with other people, particularly friends and family. But it brings its own risks too, including the legal, administrative and financial complications that can follow if the relationships underpinning the business fall apart.
Being prepared is the only effective way of dealing with these issues, says Rupert Merson, a small-business specialist with business-services firm BDO Stoy Hayward. For the co-owners of a limited company, that means drawing up a shareholders' agreement. (For partnerships, a partnership agreement fulfils a very similar function.)
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