Bob saw that it was his brother calling. “Hey Luke, what’s up?”
“Bob, I think I have some crazy good news for you”, said Luke excitedly. “This is going to take you to the next level, the sky is the limit, oh wow, brother, this is amazing!”
“Luke, you gotta tell me what’s going on. Just calm down and explain.”
“Ok, sorry” said Luke, taking a few deep breaths. “You know how I’m connected to the rugby club, and how I used to play rep rugby. Well, I was speaking with these rugby players who are looking to invest in businesses once their professional sporting career ends, and they said they’re very excited about your business, and the potential it’s got. There’s three brothers, Beauden, Jordie, and Scott, and they reckon that with their profile, and your products and growing brand recognition, they can make this the best known burger business in the country.”
Bob was stunned. He recognised that his business seemed to be getting bigger and better all the time, but he really hadn’t been sure what to do next.
Luke interrupted his thoughts: “I’ve got some papers that they’ve prepared, all you need to do is sign, it gives them some of your shares, and then they’ll put some money into your bank account. Then you can nut out the details after that.”
Bob remembered what his lawyer at Edmonds Judd had said – Never sign anything without getting it checked out first. So he told Luke to send the paperwork through, and he’d have a look at it.
After receiving the documents he made an appointment at Edmonds Judd and sat down with his lawyer, explain the background, and providing him with all the documentation.
His lawyer told him that it might be a wonderful opportunity, but there were a lot of checks to do before this could go any further. “First,” he told Bob, “you have to do your due diligence on the people you’ll be working with. This is a relationship that you will have for some time, and you need to know that they are the sort of people that you are comfortable with, that aren’t under financial pressure, that have some business understanding themselves, and that share the same vision as you, because you will all need to be in sync.
Bob nodded slowly – this was good advice.
“Secondly,” his lawyer went on, “whatever arrangements are agreed on, they should be recorded in some documents before any shares in your company are transferred, or money paid. This will set out what happens with decision making within your business, what you as the operator are able to do without checking with anyone else, what happens if someone wants to exit the business, or dies, or if you aren’t able to personally operate it anymore. Who has the final say? What if you’re deadlocked? How much of the profits should be paid out, and what should be re-invested? What if the business needs more money – do you all have to contribute? And thirdly – your accountant needs to be involved, because there can be some tricky tax issues arising out of selling shares, and you need to know what these could be.”
While there was a lot to take on board, Bob was pleased he had such good advisers on board. He left with a checklist of tasks he’d been given, thanking his lawyer, “I know I’ve got a pretty good team behind me too.”
Simon Brdanovic