At Fellow Funders we would like to make the investment in StartUp closer to individual investors. Needless to say, it would be from a professional point of view and always following the quality standards normally used by big investors. One of the unknown aspects, but with greater significance in the company’s future, is the creation of a proper Partners Deal.
What does Partners Deal mean?
The Partners Deal is a Statutory Agreement (additional to the company’s statutes) that is subscribed between its partners with the aim of regulating some aspects related to future coexistence. The Partners deal involves three big groups of rules and commitments: Transfer of shares and participations, functioning of the administrative bodies and a group with other possible agreements (remuneration policy).
The most common clauses
The most common and important clauses are:
- Drag Along: In this case, if a shareholder (generally a majority shareholder) obtains a purchase offer from a third party for a higher percentage of the Company’s shares than the shareholder holds (generally for 100% of the shares), this shareholder may drag along the rest of the shareholders so that they all sell their shares to the interested buyer.
- Tag Along: This clause gives minority shareholders the right to sell their shares when the majority shareholder sells them. In the event that the majority shareholder receives an offer to sell its shareholding, the minority shareholders will have the possibility of “tagging along” under the same conditions.
- Distribution of Percentage of Annual Profit (Dividends): In the event that the company obtains an annual profit, the investors will receive an established % of this profit (dividends).
At Fellow Funders we deeply analyze each case, and agree with the startup’s Directive Team to sign clauses that allow not to limit the development of the projects beforehand. At the same time, we safeguard the rights and possible benefits of minor investors. In each project, Fellow Funders publishes the Partners Deal signed.