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Co-founder disputes can make or break a business. Without careful handling, conflicts between founders can escalate quickly and lead to disastrous outcomes. We’ve seen how even the smallest disagreements can spiral out of control if left unresolved.
Here are three common mistakes co-founders make that can worsen conflicts:
- Avoiding Tough Conversations: Ignoring the issue only deepens the divide. Open communication is key.
- Lack of Clear Agreements: Verbal agreements often lead to misunderstandings. Memory isn’t perfect. It’s essential to formalise agreements early on.
- Taking Things Personally: Keep business disagreements professional and focused on the company’s best interest, not individual egos.
These mistakes are avoidable, and with the right legal guidance, you can protect your business from unnecessary risks. Whether it’s drafting a strong founders' agreement or navigating tough conversations, taking action early is critical.
A Case Study: How John and Niamh Reignited Their Business’s Growth
John and Niamh, co-founders of RocketCo, faced mounting tensions after their initial vision for the company began to diverge. Niamh was working full-time in the business, while John continued with his other job, as their company hadn’t grown fast enough to meet his financial needs.
Investors also expressed concerns, favouring Niamh’s leadership and suggesting that she own more of the company. Realising they needed a resolution quickly, they sought legal mediation to realign their goals.
Through structured dialogue, they reached a new agreement: Niamh would hold 60% of the company, John 25%, and an incoming investor 15%. They also agreed that if John transitioned to full-time involvement, he’d be rewarded through an employee share option plan.
With clear agreements in place, RocketCo not only resolved the conflict but saw a 30% increase in business growth over the next six months.
Take Action Now
If co-founder disputes are holding your business back, don’t wait until it’s too late. Whether you're at an early stage and need to formalise your partnership or are in the midst of a dispute, we’re here to help.
Book a consultation today and let’s ensure your business is set up for success.
