Marry in haste and repent at leisure
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Published: 29 Oct 2019
The origin of the proverbial saying ‘Marry in haste and repent at leisure’ was first expressed by William Congreve in his comedy of manners The Old Batchelour, in 1693.
“Thus grief still treads upon the heels of pleasure:
Married in haste, we may repent at leisure.”
How is this relevant to business?
Well, many companies in the SME sector are formed by entrepreneurs combining their differing skills and talents for the greater benefit of the whole company.
However, before rushing in to such a venture, you need to consider the expectations and aspirations of each shareholder/director who is contributing his or her individual talents.
This normally means that a shareholders’ agreement (a bit like a prenuptual agreement) is required to decide on the allocation of profits in the form of directors’ remuneration or fees and a formula to decide on the amount to be retained in the company and distributed as dividends to the shareholders.
A basis for the valuation of the interest of an outgoing shareholder should be included in the agreement. It should also cover the individual duties of each director/ shareholder unless a separate director’s service contract is in place.
Without such an agreement, misunderstandings can easily arise which could find yourself in court or at a mediation in order to resolve the matter.
So, the moral of the story is, put the shareholders’ agreement in place at the time the company is formed to avoid much greater costs in battling it out through the courts or mediation when these differences of opinion arise.
If you get to that stage, always consider the mediation route first: it is normally much cheaper and you have the opportunity of influencing the outcome as opposed to the more formal setting of the court.
Such disputes invariably involve an analysis of accounting data or a company valuation. I shall be happy to carry out either function to assist your case and bring it to an early conclusion.
David Cane of Sundial Tax & Finance Ltd, carries out forensic accounting exercises and private company share valuations.
He can be contacted on 0330-122-8450 or 07749 080 806
