Overview
A specialty construction firm owned equally by three partners had operated for 15 years on a one-page shareholder agreement drafted at incorporation. As the partners approached different life stages, the gaps in that document became a live risk to the business.
Challenge
The original agreement had no buy-sell mechanism, no deadlock resolution, no disability or death provisions, and no restrictions on share transfers. One partner wanted a path to reduce involvement, another was considering bringing a family member into the business, and the third simply wanted certainty. Without a framework, any of these moves could have triggered an unresolvable dispute among equal owners.
Approach
We facilitated a structured governance workshop with all three partners, then translated the outcomes into a comprehensive unanimous shareholder agreement: a valuation-based buy-sell with staged payment terms, shotgun and drag/tag provisions with sensible thresholds, death and disability triggers funded by cross-life insurance, a family-transfer carve-out subject to the other partners’ consent, and a graduated deadlock process ending in mediation rather than dissolution.
Outcome
All three partners executed the new agreement unanimously. Within a year, the framework was used for its intended purpose: one partner stepped down to a reduced role and sold a portion of his shares at the agreed valuation mechanism, with no dispute and no disruption to the company’s operations.
Related practice area: Contracts & Agreements
Portfolio demo notice: this matter is a fictional demonstration created for a portfolio site. It does not describe a real client or real legal outcome.