The “corporate divorce”: how to ensure your company exit is managed effectively

A break-up within a company can be just as painful and expensive as a marital divorce, if a plan is not put in place at the time or anticipated from the outset.

When directors, shareholders and senior executives plan to leave their company, it is not as simple as handing a notice in and can often be a stressful and complicated period of time.

Here at MSB, we regularly advise senior executives on complex financial arrangements. This includes employees and directors who hold shares in a company which need to be transferred as part of negotiations.

Here are our top tips for ensuring your exit runs as smoothly as possible.

Agree announcements and exit statements

Agreeing the terms of how your exit is to be announced ensures your reputation is protected with suppliers, customers and colleagues alike.

Check restrictive covenants

It is common practice for senior executives to have restrictive covenants (non-compete clauses) within their contracts of employment. These clauses seek to protect the company’s confidential information and business connections and therefore limit what an employee can enter into and who they can engage with for 6 – 12 months after they leave.

It is very rare for restrictive covenants to be reduced, however it is possible to negotiate terms of the covenant. We are able to advise if the restrictive covenant itself is too wide and unreasonable and therefore unenforceable.

Agree references

Agreeing your reference is an essential way to protect your reputation and your prospects of future employment. We liaise with companies on behalf of our clients where necessary, to ensure that references adequately reflect the hard work and positive impact employees have had on the company.

Negotiate notice periods

Senior employees will often be required to work a longer notice period than junior employees. If you wish to terminate your employment with immediate effect, or leave the company and reduce your notice period, it is possible to negotiate the terms of your notice period.

Compensatory payment

A compensatory payment will of course depend on your level of seniority, role and length of service with the company. Ensuring you receive an adequate financial settlement from the company is essential. We also deal with and advise on the sale and transfer of company shares.

We provide detailed and tailored advice in relation to the above in order to ensure your exit strategy is managed effectively. We strive to ensure that the focus is on maintaining an amicable but profitable mutual agreement.

For more information or to find out how we can help you, get in touch with our experienced employment team.