A practical review tool for founders and boards before, during, and after a co-founder departure.

HOW TO USE THIS CHECKLIST

Use it to organize the process and identify open issues. It is not a substitute for legal or tax advice. Not every item applies to every startup, and the correct way depends on the company’s documents, financing stage, and level of conflict.

Quick view: the first five questions

Confirm immediately

• Can the company continue paying, signing, selling, and operating without the departing founder?

• Who currently controls banking, repositories, domains, cloud tools, and customer accounts?

• Does the founder remain an employee, shareholder, board member, or authorized signatory?

• Is there a signed vesting and repurchase mechanism, and is it still in effect?

• Is a financing, major customer deal, product release, or regulatory milestone at risk?

Phase 1: Before problems arise

Founder and shareholder documents

• A signed shareholders’ or founders’ agreement is in place.

• Founder roles, workload, and expected time commitment are documented.

• Founder shares are subject to a clear vesting or reverse vesting schedule.

• The cliff, vesting dates, and treatment of workload reductions are clear.

• Good leaver and bad leaver events are narrowly and clearly defined.

• The agreement identifies which shares may be repurchased and at what price.

• The repurchase exercise period, notice process, and valuation mechanism are workable.

• Board nomination rights end or change under objective conditions.

• Deadlock and dispute escalation mechanisms are included.

• Founder loans, guarantees, and equity promises are documented.

Employment, IP, and access

• Each operating founder has an employment or consultancy agreement.

• The company owns all relevant code, inventions, designs, data, domains, and brand assets.

• Work created before incorporation has been assigned to the company.

• Contractors and service providers have signed appropriate IP assignments.

• Critical accounts use company-controlled email addresses and administrator access.

• Signing authority and payment approval limits are documented.

• Confidentiality, non-solicitation, and any non-compete obligations are proportionate and clear.

Founder alignment

• The founders regularly discuss workload, compensation, strategy, and risk tolerance.

• Role or workload changes are documented when they occur.

• The equity structure is reviewed after major financing, hiring, or leadership changes.

• Concerns are escalated before they become personal or operational crises.

Phase 2: When a departure becomes likely

Stabilize the company

• Assign temporary owners for finance, product, sales, people, and investor communication.

• Confirm who can bind the company and approve payments.

• Secure company-controlled administrator access to critical systems.

• Preserve relevant emails, files, board records, and transaction documents.

• Identify immediate customer, employee, supplier, and investor dependencies.

• Pause or restrict unilateral decisions where appropriate and properly authorized.

• Check in with the team members who worked most closely with the departing founder, including any operational, workload, morale, or knowledge-transfer issues that may need immediate attention.

• Prepare a short operational continuity plan for the next 30 to 60 days.

Establish the legal and economic position

• Collect the shareholders’ agreement, articles, board regulations, employment agreement, and vesting documents.

• Reconcile the legal shareholding, share register, cap table, and vesting schedule.

• Calculate vested and unvested shares as of the relevant date.

• Identify the possible leaver classification and the facts supporting it.

• Identify who may purchase the shares and whether that buyer can legally and financially do so.

• Check voting, veto, information, pre-emption, and board nomination rights.

• Identify founder loans, unpaid expenses, accrued salary, bonuses, or guarantees.

• Review IP ownership and any missing assignments.

• Identify tax and cross-border issues before agreeing economic terms.

Phase 3: Design the solution

Equity and price

• Decide whether the founder will retain vested shares, sell part of the stake, or exit fully.

• Confirm the treatment and price of unvested shares.

• Agree the valuation date and valuation method for vested shares.

• Decide whether the latest financing price is relevant and how investor preferences are treated.

• Appoint an independent valuation expert or define a process for price disagreement.

• Assess the impact on the remaining founders, investors, ESOP, and future dilution.

• Confirm all required board, shareholder, and investor approvals.

Payment structure

• Confirm who will fund the purchase.

• Assess whether an immediate payment would weaken the company’s runway.

• Consider installments, deferred consideration, financing-linked payments, or milestone payments.

• Specify due dates, interest, security, information rights, and acceleration events.

• Address what happens on an exit, insolvency, or missed financing before payment is complete.

• Review company law and tax consequences of the proposed structure.

Transition and ongoing involvement

• Define the founder’s final operating date and handover responsibilities.

• Decide whether a limited advisory role would add real value.

• Document the advisory scope, duration, availability, compensation, and termination rights.

• Clarify whether any board, observer, voting, or information rights remain.

• Prepare customer and employee introductions to the new relationship owners.

Restrictions and releases

• Confirm ongoing confidentiality obligations.

• Tailor employee and customer non-solicitation obligations.

• Define any non-compete narrowly by activity, market, geography, and duration.

• Confirm the return or deletion of confidential information and company property.

• Agree mutual releases and clearly list any excluded or continuing claims.

Phase 4: Negotiate and document

Process

• Appoint a board lead or neutral point of contact for the separation process.

• Keep the negotiation out of normal operating channels.

• Consider mediation or an independent expert before positions harden.

• Record interim decisions and conflicts of interest in board minutes.

Settlement documents

• Employment termination and final compensation are documented.

• Vesting calculations and share transfers are documented.

• Purchase price and payment mechanics are complete.

• Board resignation or removal is documented.

• Signing authority and commercial register changes are prepared.

• IP ownership and any remaining assignments are confirmed.

• Confidentiality, non-solicitation, non-compete, and releases are included.

• Founder loans, expenses, guarantees, and other balances are resolved.

• Transition or advisory obligations are documented.

• Internal and external communication language is agreed where appropriate.

Phase 5: Close and implement

Corporate and ownership updates

• Execute the share transfer and update the share register.

• Update the cap table and investor records.

• Complete board and shareholder resolutions.

• Update the commercial register and signing authority.

• Update beneficial ownership, bank, insurance, and compliance records where necessary.

• Complete any required investor consents, waivers, or accession documents.

Operational handover

• Transfer repositories, cloud accounts, domains, social media, and administrator rights.

• Recover devices, keys, cards, and company property.

• Transfer customer, supplier, and partner relationships.

• Document open commitments, deadlines, passwords, and project status.

• Remove access only after the required records and handover materials are preserved.

Tax and financial implementation

• Obtain the agreed valuation and supporting documentation.

• Confirm payroll, employee participation, withholding, and reporting obligations.

• Review cross-border allocation where the founder worked in more than one country.

• Consider an advance tax ruling for material or uncertain cases.

• Record deferred payments and related obligations correctly in the company accounts.

Phase 6: Rebuild after the departure

Team and operations

• Communicate leadership and responsibility changes to employees.

• Reassess milestones, hiring, and burn rate.

• Decide which responsibilities require a replacement hire and which can be redistributed.

• Review ESOP capacity for a senior replacement.

• Address morale and unresolved team concerns.

• Run a structured retrospective to identify what contributed to the breakdown, which warning signs were missed, and what should change in the company’s governance, communication, or founder setup going forward.

Investors and future diligence

• Provide investors with a factual and consistent explanation.

• Prepare a clean separation file for the data room.

• Confirm there are no unresolved ownership, IP, board, or payment issues.

• Update the fundraising narrative and leadership plan.

• Review the founders’ agreement and governance setup based on lessons learned.

Founder separations are easier to manage when ownership, governance, employment, and operational continuity are reviewed together. This checklist helps identify the questions, but the right structure depends on the company’s documents and the facts of the departure.

Alfred supports founders and boards with vesting, founder separations, cap table restructuring, governance, employment, and the related tax and business questions. Where a departure is sensitive or trust has broken down, we can also support the process through a mediation-style approach, helping structure discussions and keep the focus on a workable outcome for both the parties and the company. Reach out for an initial discussion if your team is reviewing its setup or dealing with an active departure.