B[re]aking up is never easy... a lesson from the Oetker business split

When setting up a company, it pays to spare a thought on what you would do if the unthinkable happens - whatever the unthinkable is, whether it is your death if you are the sole director and shareholder of the company, or, if you have set up a company with friends, family, or business partners - what would happen if you fall out and cannot agree on how to run the company.

These considerations are often at the back of the minds of owners - after all, there are much more pressing things to focus on - especially where the risk of the unthinkable is so remote. But as the story about the Oetker business break-up shows, even family (billionaires or not) may not be relied upon to stick together all the time.

An integral part of corporate law is to provide for worst-case scenarios and it is in these instances that the value of the work put in is realised, because disputes are often costly, especially where the relationship between the parties have deteriorated. 

A well-drafted shareholders' agreement will help to reduce the risk of such costly disputes, by setting out the principles by which the company is to be run and sometimes by providing a mechanism for the shareholders to resolve any disputes or to sell out. This provides certainty, as there is a document to which shareholders can refer to and have confidence that each shareholder is bound by it, and the mechanisms for dispute resolution and transfers can increase the likelihood of an amicable parting.

A shareholders' agreement is a live document and should be updated from time to time to cater for the company's growth and changing circumstances. What would suit a two-person family business will not suit a fifty-person multinational company - the Oetker business, for instance, would probably have had quite a comprehensive agreement given the size and turnover of the business. 

In all instances, it is worth taking the time to consider these things and perhaps getting in touch with a solicitor who can advise you and help put a shareholders' agreement in place.