A recent Los Angeles Times article, titled “Co-founder feuds at L.A .tech start-ups show how handshake deals can blow up,” recounts several telling tales of business start-up angst. The article analyzes recent tech-based businesses that began with a handshake and ended at the brink of litigation. Featuring the stories of what transpired with up-and-coming tech businesses such as Snapchat, Yik Yak and Tinder, the article points out that, while businesses start with the best of intentions, those intentions can quickly fall by the wayside when money is involved.
A prenuptial agreement, entered into before two people get married, is designed to address issues and the division of property should the marriage end. Business owners should think critically about what would happen if the business were to end or, as happens more often, if there was a crucial disagreement between the co-founders. Many businesses have been stymied when one co-founder wanted to zig while the other wanted to zag. Even John D. Rockefeller had to deal with this issue when he bought out his business partner M. B. Clark in 1863.
Anybody interested in starting a business must think through all of the potential issues and should consult with counsel to avoid problems in the future.