We're two weeks out from signing a lease for a bakery/coworking hybrid space. My partner suddenly says he won't sign unless we have a full succession plan, what happens if one of us dies, gets disabled, wants out, etc. I get the concern but it feels like a weird thing to obsess over when we haven't even bought an oven yet. Has anyone dealt with this before launch? Is he right?
Partnership
My business partner wants a succession plan before we launch
He's right. Awkward conversations are cheaper before there's money on the table. A simple buy-sell agreement and life insurance policies naming each other as beneficiary can cover the death part. The disability part is trickier and worth talking to a lawyer about.
The first six months are exactly when sudden stuff happens. You're both going to be exhausted, stressed, maybe not taking care of yourselves. Planning for what happens if one of you can't work isn't paranoid, it's just being a grown-up. That said, you don't need a fifty-page document. Handshake terms written down is better thann nothing.
Also, succession plans and exit plans are cousins. If he's asking about this before launch, he might be worried about something else. Worth asking him directly what he's afraid of.
lol at 'succession plan' for a business that doesn't exist yet. is he also going to write a speech for the ribbon cutting about your legacy? i'm team OP, this sounds like procrastination dressed up as diligence.
I don't think he's procrastinating. We've been working on this for 14 months. He said his cousin got screwed when his business partner died and the widow inherited half the company and wanted out immediately. So I get it. I'm just annoyed we didn't talk about this eight months ago.
Two weeks out is better than two years in. Do the basic paperwork now, refine it later. And honestly, if he's bringing it up now he probably didn't know how to bring it up before. Some people are like that.
fair enough. i still think half of these plans are just lawyers selling you a binder. but if his cousin actually went through it, i get why he's spooked.
Late to this, but OP, do you know what happens to the lease if one of you dies? Landlords don't care about your plan, but they care about getting rent. If the lease is in both names and one person dies, you might be fine or you might be in a mess. Worth checking before you sign. I'd rather have the succession conversation than discover that clause later.