Partnership Gone Bad: What to Do if You’re Splitting Up With Your Business Partner

At the start of your business partnership, you probably never thought about the day where you might need to break things off and go your separate ways. Although it’s a difficult time for both you and your partner, sometimes the best decisions are the hardest to make. Because you and your partner have built a successful business, you want to make sure that the break up is as clean and positive as possible, regardless of what negative things have gone on between you.

At Integrated General Counsel, we understand how muddy the waters can get and want to help you and your partner see an amicable split. If you’re in the process of breaking it off with your business partner, please don’t hesitate to contact us today. In the meantime, we’re here to help shed some light on what to do when you’re splitting up with your business partner. Let’s begin.

1.   Consult with a business law attorney

Your first step when considering a drastic business change should always be to speak with an experienced business law attorney who can explain how everything should work before any final decisions are made. As a partner, you’ll have legal obligations to others in the company and even to your clients, so it’s important that you make sure this split is done as much by the book as humanly possible. When it’s done right, both your personal and business interests remain better protected from any further turmoil that might develop.

2.   Return to your startup contracts

Hopefully, when your business partnership first formed, you and your partner had the foresight to not only execute a partnership agreement, but to include what happens when one partner wants to go his or her separate way. If you did, then the process should be laid out and you can worry a bit less about what to do next.

3.   Create an exit plan

If there is no partnership agreement or a strategy wasn’t included, you’ll need to create an exit strategy that works for you and your partners. This is something that your lawyer will have the experience and knowledge to help you do fairly and properly as required by any applicable laws. Dissolving a business partnership is governed by the laws of your state, so making sure you are in compliance with all the laws will help keep the break clean.

4.   Figure out who gets what

This point in the process can get ugly, particularly if you don’t have a partnership agreement in place to help. When determining how to divide assets if it isn’t clear, working with lawyers is the best way to avoid negative confrontations and find a common ground between you and your soon-to-be ex-partner.

5.   Decide what (or if) you want to sell

If you’re the one who wants to leave but your partner wants to keep the business running, then they have the option of buying out your shares. If they don’t want to buy you out, then you will have the option of selling yours off which might result in the selling off of the entire business.

Ending a partnership because something went wrong is a messy business. However, regardless of what’s transpired, it’s important to remember that at one point you and your partner did actually see eye to eye. At the end of the day, it’s about maintaining respect and working towards seeing an end that is as positive as possible given the circumstances. At Integrated General Counsel, we understand how difficult this decision is to make and want to work closely with you every step of way to keep you and your assets protected. If you are thinking about dissolving your business partnership, please don’t hesitate to contact us today.

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