Family Feud

Abstract

Whenever the pie shrinks, there are more fights over how it is divided. This has become an increasing problem for professionals who manage the general partners and investment managers of venture capital funds. With a greater number of disputes, a host of problems in the agreements among principals is often exposed. Ambiguities and deficiencies in the agreements make dealing with disputes more difficult than it would otherwise be. Although the primary purpose of these agreements is the division of profits, another important function is to determine how to unwind the relationship. This article presents the issues that should be discussed prior to the termination or withdrawal of a principal.