Getting into a business partnership with someone can be a great way at starting a business, you trust them to have your back and grow the business together.
This partnership agreement that you have with one another is meant to be tight-knit so that you can meet your objectives and share the responsibilities of running it.
You all want to be leaders that can shape the industry you are in, and hopefully, that shows in the work that you do together.
However, not all business partners are on the same page, and in some cases, what was once seen as a healthy conflict to see different viewpoints and build on that, can turn into something much worse ending in significant partnership disputes that dissolve a business relationship.
If you believe, as a business owner, that your partnership has come to an end, you’d want to hire a Business Lawyer. This is because there is every possibility that the dissolution of the partnership could result in a costly dispute. Now, you’d want to learn how to go about the process and sustain minimal damages. So, read on to learn more about how this can be done and if you will need an experienced business attorney to help you move on to the next steps.
Why Do You Want To Dissolve Your Partnership Agreement?
Before you dive in and contact an attorney to help you cut out your partner, you need to think about why you want to do this and if there may be another way that you can discuss this problem that you are facing.
What Are They Doing?
If they are a bad business partner, e.g. they do not take their share of the work, they are hard to contact, and you feel like you are doing most, if not all, of the work every day and you barely see them, then that may be hard to sort out. Similarly, if the business partner engages in unethical or wrongful actions, it can have significant repercussions for the entire company. Such actions may damage the company’s reputation, legal standing, and relationships with clients or stakeholders, potentially leading to financial losses and strained partnerships.
Addressing and resolving these issues promptly is crucial to maintaining the integrity and success of the business. Therefore, before confronting them, ensure you gather sufficient evidence by hiring a private investigator (click here to find out more) to build a robust case against them and then take the necessary actions.
Talking With Your Underperforming or Difficult Partner
You could try and talk with them about their performance and stress that you are in this together and it is important that the load is shared to help drive the business forward and build on what you started with.
If they do not respond well to that and you feel like you cannot have any sensible and pragmatic discussions about what they are doing, and it keeps happening, then maybe it is time for you to cut out this partner and move on.
You want to do what you can to make sure that relations remain amicable and that you both reach a fair and reasonable settlement, however, that may not always be the case if you come against some resistance.
Steps To Take When Dissolving Business Relationships
Before you come to a buyout agreement, you need to think about the right steps to take so that you can cover all your bases, for example, making sure that your partnership’s confidential information and intellectual property are handled correctly and follow business law. Of course, you should consult qualified legal professionals such as these manchester business solicitors when drafting and executing all the paperwork related to the dissolution of the partnership. This would clearly establish the rights of all partners involved and avoid any legal problems in the future.
Consider The Structure of Your Business
How is your business structured? Is it a limited company or a partnership?
Whichever one it is, there are different ways for each to be handled whether you are ending a business relationship or you are thinking about posing a buy-sell agreement.
Limited Company
If you are dealing with a limited company, then you will need to read the Company’s articles/memorandum of association very carefully, as well as any shareholders agreement that you have.
Partnership
On the other hand, dealing with just a partnership will mean checking the partnership agreement.
But, if no partnership agreement exists, then you will need to gather all of the details you put together at the start to see what basis you started the relationship on and how that can be used today.
Before you started your business, you should have a separate buyout agreement signed by each of the partners so you can refer to it when disputes arise so you can see what the necessary steps there are to take.
Dealing With The Conflict
Whatever the disagreement is, it should always be handled with care so that there are not any crosswords spoken or there is the potential for things to get nasty and words being said that cannot be taken back.
If you both come to the conclusion that the partnership needs to end and you are happy with moving forward at dissolving the partnership and the other partner can carry on or they can get a new partner, then this is the best outcome as legal action does not have to be taken.
It is always important to seek legal advice when it comes to these discussions. It is wise to collaborate with a legal advisor who possesses expertise in your field. For example, if you own a cannabis business, obtaining legal counsel from a Portland Cannabis Law Firm (if that’s where you’re located) might be more sensible, as they can offer valuable insights tailored to your industry. This guidance will help you navigate the intricacies of partnership dissolution smoothly, minimizing the risk of costly legal disputes in the future.
Doing this will prepare you both and you will be able to see what the best path is through all the information you have in front of you.
Legal help will provide more insight into the issues and stop you from tripping up and making any more issues.
Negotiating Their Departure
If everything is going amicably and there doesn’t seem to be much conflict after consulting with legal professionals, then you both can discuss when they should leave and how they should leave, drawing up documents that solidify their leaving plan and strikes them off the business.
However, if things do not go to plan, then it is time to look at other options
Partnership Dissolution
There are a few options that you can go for when dissolving a partnership, so you will need to speak to your attorney and see which one would suit the current circumstances.
- Invoking your dissolution clause in your partnership agreement
- Going to court for the dissolution on just and equitable grounds
- Speaking to the other partners (if you have them), and convincing them that this is the best course of action right now
- Serving a notice of dissolution
You can go over these with your business attorney and play out the outcomes of each to find out which one would give you and the business the best results if you can not get them to leave voluntarily.
What Else You Need to Consider
Before you put everything in motion, you need to think about what will happen after they have been removed and how you can navigate through that.
- What happens to the suppliers after they have left
- What happens to the customers after they have left
- How to deal with confidential information and intellectual property
- How the shares in the business will be distributed
- What the liabilities are for any ongoing debts
When you have this figured out, this can help you move forward in the business and find what you need to adapt and move on after your partner has left.
Conclusion
It is not going to be easy dealing with a partner leaving, especially if it is under serious circumstances.
Knowing how to get rid of a business partner in a proactive and healthy way will be best for the business in the long run, especially if you were worried about what could happen if they stayed.
Feel rest assured that you are doing the right thing for the business and understand that this is normal and it will happen with many businesses.
You haven’t failed because you are moving on from how you initially started, all businesses have to grow and sometimes that doesn’t fit in with the old way of doing things.