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Partners by Conduct. The Deal You Made Without Signing

A shared bank account, a handshake, and an oral agreement to split profits may feel like an informal collaboration. Legally, however, those facts can support a much more consequential conclusion — the parties formed a partnership even though they never signed a partnership agreement, or the parties agreed to become partners without observing applicable organizational […]
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Interested Transactions in Delaware Corporations

Can a director or CEO of a Delaware corporation do business with the corporation? Can the director lend money to the company, provide paid services, or recommend a relative as an independent contractor? The short answer is “yes”, but the transaction should be handled as an interested transaction and approved or reviewed under Delaware’s conflict-of-interest […]
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Indemnification and Advancement of Fees: Why Clarity Matters for Founders and Partners

In New York, courts strictly construe indemnification clauses. This means that: Under New York Limited Liability Company Law § 420, LLCs are permitted to indemnify, hold harmless, and advance expenses (including legal fees incurred in litigation) to members, managers, or other persons in connection with legal claims, except where such person acted in bad faith, […]
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Indemnification. Protecting the Courage to Lead

What Indemnification Means Every business needs protection that allows its leaders to act with audacity rather than fear. That shield can be the indemnification provision in a partnership agreement. An indemnification is a legal obligation a company undertakes to cover its managers, members, officers, and possibly other people (collectively named “agents”). These individuals act on […]
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Business Divorce: The Exit Often Not as Exciting as the Start

Definition For many entrepreneurs, the term “business divorce” is the most frightening prospect. The term refers to the legal separation of business partners who cannot continue operating the company together. Unlike family divorce, “business divorce” is primarily focused on the division of assets and liabilities. Depending on the applicable law, governing documents, and the partners’ […]
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Before the Handshake: What Happens When One Partner Leaves?

Before starting a partnership, every founder needs to face the uncomfortable question: What happens to the company when a partner leaves? A clear “buy-out” provision in the partnership agreement, designed to preemptively structure a partner’s exit, secures the company’s financial future and stability. This proactive step ensures that, regardless of the reason — a voluntary […]
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Due Diligence During a Company Acquisition Transaction

It is difficult to overemphasize the importance of due diligence during a company’s acquisition transaction. Since the investigation aims to uncover the risks associated with purchasing the target company, the outcome of due diligence may result in a significant decrease in the purchase price or even discourage the buyer from proceeding with the deal. Different […]
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Deadlock Resolution in Partnerships: Legal Considerations

When two equal partners pool their resources to run an enterprise together, they rarely anticipate any unsolvable disagreements between them. An intractable disagreement over a business issue is usually referred to as a “deadlock.” The topic of deadlock resolution is often underestimated and overlooked by business owners until they encounter it during their business operations. […]
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Pivotal Considerations for Effective Business Partnerships

When considering a partnership, several key matters require careful attention. Business integration offers undeniable benefits, such as pooling talent and skill sets, sharing resources, and expense reduction, ultimately fostering business growth. However, a successful unification of business operations with another owner requires meticulous planning. To ensure an advantageous outcome for an enterprise, it is particularly […]
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