Client
Our client, MinieMoney Inc., is a fintech company that provides an all-in-one mobile app that allows kids and teens independent access to money and money practices with full parental control and supervision. They are a digital bank for kids in Africa. They promote financial literacy/inclusion among teens in Africa by giving them monitored access.
Problem
One of the client’s founders wanted to exit the company and step down from their role. This posed challenges in managing the exit process, transferring responsibilities, and ensuring a smooth transition for the remaining team. The company needed to establish a plan that would protect its interests, maintain employee morale, and address the treatment of the departing founder's vested and unvested equity stake.
Approach
We advised the client on the most amicable way to achieve its desired objective. This entailed following several processes which included the following steps:
- Review of Legal Agreements: We examined the founders’ agreement to clarify the exit procedures, equity implications, and the departing founder’s obligations. The vesting schedule outlined in the agreement specified the proportion of shares the departing founder would retain, noting that unvested shares typically revert to the company.
- Equity Repurchase: We advised the client on the necessary steps to repurchase the vested shares from the departing founder and prepared the requisite documentation for the share buyback. The founders’ agreement granted the company the right to buy back these shares at fair market value. We also drafted a document to specify the portion of vested shares that the departing founder would retain, clearly defining their rights to those shares.
- Financial and Compensation Settlements: We informed the client of the importance of settling all outstanding financial obligations, including any unpaid expenses related to the departing founder or the repurchase of their vested shares.
- Separation and Mutual Release Agreement: We prepared a separation and mutual release agreement, signed by both the company and the departing founder, to prevent any future claims or disputes between the parties.
Result
We were able to achieve an amicable separation of the founder from the company ensuring that parties' rights and interests as contained in the founders’ agreement were adequately protected.
