Turinas & Bird, LLC

Strategic Counsel for Cloud Based Technology Companies & Expansion

(646) 679 4313

  • Google+
  • Linkedin
  • Twitter
  • Home
  • About
    • Alice Turinas
    • Alison Bird
  • Services
  • Client Success Stories
    • Testimonials
  • Blog
  • Contact Us
  • Health Tech
  • HR Tech
  • Corporate/Transactions
  • Technology Licensing

13 Factors to Consider When Creating an Operating Agreement for your LLC

April 28, 2015 by Alice Turinas Leave a Comment

operating agreementEnsure Disputes Among Partners Don’t Tank Your Business

All too often when the great idea hits, new entrepreneurs jump into business with friends and colleagues, invest their assets and their time, without pausing to consider how disagreements and business breakups will be resolved.

Perhaps principals are too busy to slow down. Perhaps the conversation is uncomfortable among people who trust one another, or perhaps it feels foolish to use limited resources on “what-if” scenarios. However, in our experience working with startups and even well established businesses, one of the most common reasons for failure is disputes among founders without a pre-existing roadmap for resolution. With this in mind, whether it is memorialized in an LLC operating agreement or a corporate shareholders agreement, the following are the top thirteen that need to be answered at the outset.

  1. What decisions will be delegated to managers?
  2. What decisions must be approved by a partner?
  3. What decisions must be brought to a vote of all partners?
  4. What decisions require majority, supermajority, or unanimity of the partners?
  5. How will deadlock be addressed?
  6. How will death, incapacity of a member be addressed?
  7. What happens if a member wishes to leave the enterprise?
  8. What happens if one of the partners is not pulling his or her weight? Can they be forced to leave, if so, how?
  9. What happens if one of the partners is acting against the interests of the Company? Can they be removed and if so, how?
  10. How will sale of minority stakes be handled? Will the majority holders have a right of first refusal or approval rights?
  11. How will desired sale of majority stakes be handled? Will there be drag-along/tag-along rights?
  12. If a capital infusion is needed how will that be handled? Can contributions be forced? Will dilution or subordination be permitted?
  13. Is there any property that belongs to one party or is everything developed shared by the enterprise?

While addressing and memorializing the answers to these questions will not guarantee ultimate success, in our experience, companies that take the time to negotiate these key points while everyone is on the same side often weather disputes without falling prey to them.

 

Filed Under: Corporate Law Tagged With: corporate law, LLC, operating agreements, partner disputes, partnerships

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Our Latest Posts

  • October Executive Health Tech Roundtable
  • Cyber Insurance: Does Your Policy Cover Your Risk?
  • Europe’s New Data Protection Regulation: Far Reaching and Highly Punitive (even for US Companies)
  • Increasing M&A in 2017 Predicted, Benefitting Technology Companies such as Digital Health
  • The Hidden Cost Of Non-Prescriptive Cybersecurity Regulation: Have Regulators Begun To Catch On?

Client Testimonials

Turinas & Bird, LLC
"When I am considering hiring a lawyer, I look at whether they spend time to assess my pain factors, listening to what our needs are going to be. I want problem-solvers rather than over-analyzers, who understand my priorities as well as my issues. Other lawyers look solely at legal issues. Turinas & Bird looks at both the legal issues and practical issues, and then form a strategy. Among other things, I rely on them as an accessible sounding board. They function as our outsourced general counsel."
Bruce Groves President, Emilcott Associates, Inc.
Turinas & Bird, LLC
"When I am considering hiring a lawyer, I look at whether they spend time to assess my pain factors, listening to what our needs are going to be. I want problem-solvers rather than over-analyzers, who understand my priorities as well as my issues. Other lawyers look solely at legal issues. Turinas & Bird looks at both the legal issues and practical issues, and then form a strategy. Among other things, I rely on them as an accessible sounding board. They function as our outsourced general counsel."
Bruce Groves President, Emilcott Associates, Inc.
Turinas & Bird, LLC
"Turinas & Bird is our go-to law firm for our expansion to have a permanent presence in North America. Alice’s experiences as a lawyer in both the US and the UK, our headquarters country, have been invaluable to us. I also appreciate her genuine concern for our issues, and how she understands the challenges in providing professional services to global consumer products companies."
Fiona Blades CEO, MESH Planning
Turinas & Bird, LLC
"With Turinas & Bird, I got exactly what I wanted, from the right person, and knew my company’s interests were well-protected, on our company’s most significant international transaction. Unlike her counterparts at a large law firm, Alice gives us her full attention without needlessly running up the bill. In addition to having significant corporate and international experience, she is friendly, conscientious, quick to understand new situations, and nimble in navigating the best way through a challenging problem. Her advice is straightforward: ‘This is what we need to do to protect your company and achieve your goals.'"
Dr. Ed Guy CTO, Practice Unite
Turinas & Bird, LLC
"When we co-principals of our consulting firm needed a shareholders agreement, I chose Turinas & Bird because of Alice Turinas’ practical, problem-solving approach. From discussions I had with her before she was aware that we were looking for legal advice, it was evident that she had deep experience with joint ventures and co-ownership issues. Alice laid out our choices in a clear, jargon-free way, so we could have our agreement tailored to suit our needs and priorities. Since then she has also advised on client agreements involving intellectual property matters, and has proven once again to be pleasant, responsive and practical. I am confident that she puts our company’s interests before her own; for her, we are not just another source of billable hours."
Beth Williams Principal, Forward Focus, Inc.
Turinas & Bird, LLC
"Alison Bird was instrumental in launching our small business. Her methodical approach in establishing our legal entity and supporting documentation gave me much comfort that we had a solid yet versatile infrastructure to operate the business with the greatest efficiency. Additionally, her ability to think outside of the box helped us to structure solutions to even the most difficult of business challenges. Alison Bird offers the unique combination of great command of the law, great solution orientation, and great charm, rendering her a key advisor in our work."
Heather Ibrahim Leathers Co-founder, Digitod
Turinas & Bird, LLC
"Alice Turinas and Alison Bird are an incredible team with the ability and connections to assemble the best team of partners for their clients. With their meticulous, well-organized and caring approach, I always felt protected and in secure hands. When combined with their rich experience, knowledge and guidance, I knew that I had hired the right lawyers - people I trusted to help me safely grow my business and take it to the next level. I highly recommend Turinas & Bird."
Kimberly Eads Managing Member, Vital Development LLC
Turinas & Bird, LLC
"Alice Turinas has a wide range of technology skills and startup business experience. Thanks to that, she has offered valuable suggestions, and I know Turinas & Bird can handle our needs as we grow. Because I like an answer that addresses the ‘ins’ and ‘outs’ of an issue, Alice made sure that I had a good understanding of the available options, and not just the strict legal answer. And while other firms lack a personal touch and thoroughness, Alice is warm, outgoing and willing to go the extra mile. The results have been excellent: our issues were well understood, and the outcome has been far better than my expectation."
Ryan Gyure CEO, Cannonball Projects, Inc.
Turinas & Bird, LLC
"Alice Turinas enabled us to close the sale of our business by the end of the year, saving us from paying substantially higher taxes had we completed the sale later. This was quite a feat, since she was not only dealing with the buyer, but also obtaining consent to the sale from the national franchise of which our business was a part. There were times when we doubted whether everything could get done before year end, but somehow, with her help, it was finished before our deadline."
MaryAnn & Peter Stajk former owners of a retail battery distributor
Turinas & Bird, LLC
"During a 'crunch' period, Turinas & Bird handled negotiation of several agreements with technology providers. They sent frequent updates and recommendations with just the right amount of detail, demonstrating sophisticated experience and a results-driven attitude."
Helen Allison Group Vice President-Legal (Corporate IT), Wyndham Worldwide Corporation

Our Offices

New York Office
347 Fifth Avenue, Suite 1402
New York, NY 10016
(646) 679 4313
Development@TurinasBird.com

New Jersey office:
30B Vreeland, Suite 210
Florham Park, NJ 07932
+1 (646) 679-4313

Texas office:
2600 Lake Austin Blvd, Suite 5101
Austin, Texas 78703
+1 (646) 679-4313

©2015 Turinas & Bird LLC
Attorney Advertising. Prior results do not guarantee a similar outcome.
Privacy Policy   |   Terms of Use   |   Design Credit