JimBo's Rental Tips
Over the past 28 years, I have learned some simple concepts that can make your rental house more profitable. I hope some of them will work for your company.
Watch this website for regular posts of tips to help you succeed in the great game of rentals.
At Five Bo Inc. we have a staff of experienced rental people to help you with any of your consulting needs.
Tip # 10 - Unanimous Shareholder Agreements (Posted Dec 27th, 2018)
I'm slightly embarrassed to have not posted a rental tip in 2018.
But it was a very busy year for Five Bo Inc with lots of learning to pass on to my rental friends.
In addition to taking on the MEC AWP and Vitali Intl Hoist lines, I was thrilled to bring two partners into the Five Bo Inc family. Craig Barnstable has been working in the company for two years and my brother Bob came on board after 20+ years at Skyreach Equipment and United Rentals.
Knowing and trusting both of the above mentioned gentlemen, I wasn't sure how much I needed to "get on paper".
My thoughts were (and still are) that any issues that might arise we would sit down and figure out as friends and family.
But interactions with several of my customers in 2018 taught me that you should always have a formal document in place to cover any future issues. In the best case, it never has to be referred to, but if not in place you can have some major complications.
The first step is get a good lawyer involved to write up the agreement. This is NOT a template you want to pull off the internet and sign.
Some unforeseen situations that could come up are; mental illness, death, divorce, bankruptcy, sale, acquisition, permanent disability, natural disaster, philosophy change or you just get sick of each other.
The best tool to cover as many of these issues is to get a unanimous shareholder agreement (USA) in place with all parties involved.
I'm not going to go through all the options and clauses to include in a USA, but will suggest a couple clauses to suggest to your lawyer when constructing the agreement.
Shotgun or buy/sell clause - an exit provision that allows partners to buy out other partners
Share distribution - type (voting and/or dividend paying) and percentage of shares per partner
Shareholder loan structure - does lending have to be equal to percentage of ownership? who can lend and how do you pay out loans.
And a bunch of other legal stuff that your lawyer will include.
The BIGGEST TIP I can give you is to take your time and get the USA done right. Include all parties at the start and make sure everyone understands and agrees to the structure. The more discussion you have during construction will help all parties involved later on. Also be sure to ask questions of your lawyer and maybe have them involved in all parties walk through of the USA.
I want to thank about a half dozen of my customers in Alberta, BC and Saskatchewan that gave me advice on setting up this USA. They learned and paid for that knowledge through experience. Some good but most painful.
You folks know who you are and again I thank you for the help.
If looking for help with selling, buying or bringing in partners to your business, feel to give us a call.
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