Louis Lehot Publishes on Legal Considerations for Co-Founder Breakups

This article by Louis Lehot originally appeared on FOLEY on October 22, 2024: Louis Lehot Publishes on Legal Considerations for Co-Founder Breakups

Foley & Lardner LLP partner Louis Lehot authored The Recorder article, “Co-Founder and Startup Divorce: Hope for the Best, Prepare for the Worst,” providing insight on the legal considerations involved in the separation process.

“Much like a marital divorce, a business divorce can be fraught with emotion and legal fees, and the process often results in a division of assets, leaving both parties with less than before,” Lehot writes. “There are many situations that can lead to co-founders splitting, including personality differences, differences in work styles, different work ethics, or opposing business visions for the startup’s future.”

He notes several important factors for founders heading for a split to consider, including thoughtfully assessing cap table, company valuation, capital contributions, vesting schedule, transfer process, IP matters, business protection, and overall strategy, execution, and plan for communication.

“Address the legal, financial, and operational considerations carefully and the entire process with respect,” Lehot concludes. “A win-win solution allows everyone to move on amicably and in the end, how you handle the breakup can have lasting effects on your reputation and your business.”

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