“Whereas” clauses carry declarative and commercial value, as well as legal implications on the contracting parties in the event of a dispute down the road. It is therefore important to give them due consideration in advance in order to avoid and avoid unnecessary obstacles later on.
It’s extremely unfortunate, but the sad reality is that startups often close down when founders experience a falling out. When I step in, my goals are to offer tools and solutions that will enable the company to continue operations seamlessly, mitigate loss of value, and when possible – help the parties separate on amicable terms enabling the founders to maintain their good reputation and continue doing business freely in this small industry.
Including milestones in commercial agreements enables us to set expectations between the engaging parties and link compensation to achievements. We advise our clients who are contemplating the use of milestones not to fall for their seemingly straightforward appearance, and to take the time to consider potential issues that may arise down the road.
While serial entrepreneurs may already be immune, or at the very least indifferent, first-timers often have trouble biting the Repurchase Agreement bullet. How did you feel when your investors told you that reverse-vesting provisions were going to apply to shares that were already yours?