Mediation & Restructuring Outcomes
When communication gridlocks co-founders, court-ordered liquidation or receivership threats emerge, destroying enterprise value. We stepped in to negotiate a structured corporate exit.
3.5M SAR
Software Assets & IP Protected
100%
Employee Retention Rate
The Challenge: Deadlocked LLC and Threats of Judicial Liquidation
An innovative B2B tech startup based in Riyadh was incorporated by two co-founders (holding exactly 50% shares each). Following two years of rapid scaling, reaching a market valuation of **3.5 Million SAR**, a major strategic rift emerged:
- Administrative Rift: Partner A (Technical Lead) desired to seek venture capital funding and expand SaaS assets, whereas Partner B (Commercial/Financial Lead) wanted to stabilize services and distribute profits immediately.
- Corporate Deadlock: Because of the 50/50 shareholding structure, no administrative or financial resolution could be passed under the Articles of Association, resulting in the freeze of corporate bank accounts.
- Adverse Actions: One partner locked software server access, while the other threatened a manager liability lawsuit and judicial liquidation of the LLC, endangering contracts with large enterprise clients.
The Solution: Structured Mediation and Flexible Exit Engineering
Rather than compounding the issue with commercial litigation, Attorney Saleh Al-Mohamadi deployed a **Structured Legal Mediation (Alternative Dispute Resolution)** strategy to secure a mutually beneficial exit:
- Immediate Escalation Freeze: Attorney Saleh Al-Mohamadi conducted independent sessions with each co-founder, clarifying that judicial receivership would slash market valuation by over 80% and destroy client relationships.
- Independent Tech & Asset Valuation: Retained certified financial and technical evaluators in Riyadh to calculate the fair market value of the software IP and projected revenues.
- Engineering a Fair Share Buyout: Negotiated a deal where Partner A (Technical) purchased 100% of Partner B's (Commercial) shares for a structured lump-sum payment, coupled with a 2-year non-compete covenant for Partner B in the KSA market.
- Drafting a Binding Settlement Deed: Drafted a comprehensive settlement releasing all claims, subsequently modifying the Articles of Association and registering the transfer at the Ministry of Commerce without disrupting staff or clients.
Lessons Learned: Golden Rules to Avoid Partner deadlocks
Preventative recommendations for startups and founders in Riyadh:
- Avoid 50/50 Equity Splits: Equal splits invite operational paralysis in deadlocks. Ensure a tie-breaker mechanism exists or structure shares to allocate a voting majority.
- Draft a Shareholders' Agreement (SHA): Do not rely solely on standard Ministry of Commerce Articles of Association. Implement a comprehensive SHA detailing buyout triggers, valuations, and ADR options.
- Enforce Absolute Confidentiality: Keeping co-founder disputes highly confidential shields bank credit, client trust, and prevents developer talent drain.
Proactive corporate structuring and defining clear exit procedures is the ultimate guarantee for startup longevity and growth in Riyadh.