When a founder leaves from a legal perspective?

In a world of venture capitalism, tech company selling, and Shark Tank; it is important to make sure that the transition is done well legally.  Not too many founders and/or acquiring companies think the transitioning through regarding a founder leaving the company.

When the founder of a business leaves, there are several legal considerations to keep in mind in order to keep the business going.  And when we mean keeping the business going, we are taking about growth. As we all know, that if you aren’t growing, you are dying.

Succession Planning: Having a plan in place for when the founder leaves can help ensure a smooth transition and minimize disruption to the business. This may include designating a successor, creating a buy-sell agreement, or establishing a board of directors.

Review of Contracts: Make sure to review any contracts that the founder was party to and determine if there are any provisions that may be affected by their departure.  Not too many times do companies take time to review contracts and deals that are outstanding. This is imperative during a transition. Employee Agreements: Review any agreements with employees and make sure that they are still enforceable without the founder's involvement.

Intellectual Property: If the founder was involved in the development of any intellectual property, such as patents or trademarks, it is important to ensure that the business retains ownership of that property.

Business Structure: If the founder was the sole owner of the business, consider whether it makes sense to restructure the business and bring in new partners or shareholders.

It is important to consult with a lawyer or other legal professional to ensure that all legal issues are properly addressed.

*Always consult a lawyer for more information.

~ Attorney Ronnie O’Brien Rice, Ph.D.

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