The life of a business owner can be difficult and exhausting—sometimes even more so when partnerships are involved. Many partnerships don’t survive the ups and downs of business, but it doesn’t have to end in a firestorm of toxicity.
It is possible, when the right steps are taken, to dissolve a business partnership on amicable terms. If you foresee a dissolution in your future or just want to have a contingency plan, it is highly advised that you speak with a knowledgeable attorney.
Generations Law Group provides legal counsel to business owners throughout Idaho. Read on to learn more about what our attorneys have to say about partnerships.
Knowing When to Plan for Partnership Dissolution
The best way to plan for an amicable dissolution is when you’re forming your business with your partner. Having an exit strategy from the beginning can help prevent hard feelings if things simply don’t work out.
As you’re developing your business strategy with your partner, it’s wise to discuss what should be done in the event that one of you needs to move on. These discussions can help you both come to terms with the fact that sometimes business relationships end for a multitude of reasons.
If you haven’t yet planned for a potential dissolution and your business already exists, it doesn’t hurt to discuss potential exit strategies with your business partner and consult with an attorney.
Waiting until your business is in trouble or your partnership has taken a sour turn could result in arduous and draining legal battles that could be avoided.
Commit to Maintaining Professionalism and Empathy
When your bottom line is affected, it can be easy to give in to emotion and frustration. But, lashing out at your business partner could make amicable dissolutions impossible. Bear in mind that both of you must protect your financial interests and your wellbeing.
Understanding that your business partner is likely more motivated to protect themselves rather than actively trying to hurt you can help you maintain a professional and empathetic perspective.
When you have the urge to lash out, make a concerted effort to take a pause. Gather your thoughts and process your feelings instead of reacting to your emotions.
Business Exit Strategies
There are a few business exit strategies that could work for you and your business:
- One way you can prepare for partnership dissolutions is to implement buy-sell agreements from the get-go. A buy-sell agreement helps facilitate a smooth transition in the event that a partner voluntarily or involuntarily leaves a business. These agreements can ensure that a business transitions smoothly after the loss of one of its partners.
- If a buy-sell agreement isn’t in place, business owners can consult with an attorney for a separation agreement. In these instances, most business partners retain their own representation and lawyers work with their respective clients to draft a separation agreement. Similar to the mediation process in a divorce, separation agreements typically involve lengthy negotiations. A separation agreement can stipulate values for each partner’s share of the business, the division of business assets and debts, and when and how clients and vendors are notified of a partnership dissolving.
Separation agreements are not the end-all, be-all involved in dissolving partnerships. There is often legal paperwork that must be submitted to municipal governments, banks, courts, and tax authorities such as cancelling permits and licenses, closing banking accounts, and terminating lease agreements.
Contact an Idaho business attorney today
The process to dissolve a business—even a small one—is complicated. Having a trusted attorney advocate for your best interests can make the process much smoother. If you are looking to terminate a business partnership or discuss the best way that might go in the future, contact Generations Law Group at (208) 401-9300 to schedule a consultation.
