Ask HN: Do I have to sell to my cofounder? What can I expect?

https://news.ycombinator.com/item?id=5071056

by olebrown • 14 years ago

5 3 14 years ago

news.ycombinator.com

Our company ran low on funds about 4 months ago. We decided it would be best If I took on an advisory role and went to work elsewhere to cover my personal expenses. I have vested shares in a large portion of the company. We had raised a modest seed round from a few investors.

Recently my Cofounder who has been absent reached out to me and stated he needed to buy out my shares to help secure further funding for the company. I'm unsure if I'm obligated to sell to him. If so what can I expect from the sale?

andymoe• 14 years ago

I don't know (probably not obligated to do anything) but I keep seeing questions here that should really be asked to an attorney or advisor you trust. So I'd like to make a suggestion to the community of programmers and entrepreneurs here young and old. If you get a job or happen to be in a position where contracts are involved ask around and find an attorney to read over your employment contract or other contract you run into. It should not take them more than an hour or two. They can usually give you a nice bullet point email or a quick phone call of what's in there and what it all means. It helps if you give them a list of your concerns upfront.

Now you have a relationship with an attorney and have developed some kind of trust with them. That's awesome! (Keep sending them your employment contracts when you change jobs! There are some crazy things in there!)

So you find yourself out on your own and need advice on something really important like if you have to sell your shares of a business you started to your co-founder so they can raise another round. Who are you going to ask? Your trusted attorney who hopefully reviewed your original contract with said co-founder!

brudgers• 14 years ago

(IANAL)

If you have an operating agreement it would ordinarily cover buyouts and the conditions under which they are mandatory.

Otherwise, any obligation to sell is less likely under ordinary circumstances.

amorphid• 14 years ago

Ask a lawyer. I'm guessing you don't have to sell if there's no contractual obligation to do so. Selling may be a good idea anyway, but that's a different matter.

Ask HN: Do I have to sell to my cofounder? What can I expect?

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