How to Survive a Business Divorce – Partnership Dissolution
No one goes into a business partnership planning on ending it before its intended purpose has been achieved. But despite this, things happen, people change, and life moves forward. In many cases, if it’s the first sign of trouble, you may be able to work through the issue – especially if you have an agreement in place beforehand that governs the divorce. But, in the event that, for whatever reason, moving forward with a venture, partnership or other transaction is impossible, there are some things you can do to give your business the best chance of surviving the divorce.
Of the primary concern in a partnership breakup can be the financial resources at stake including both assets and liabilities of the business. Determining the rights and obligations of the partners can be a difficult process that can consume assets and time and be emotionally draining. Sometimes, even with the best intentions, things can go awry in a way that steers the business into financial troubles, or worse – bankruptcy. To avoid this for your business, you should contact a business attorney right away. But before you even do that, here are some great ideas to get you on the right foot right now:
Ways to Protect Yourself and Business During a Partnership Breakup
There are a few key things to think about right now as well as some immediate steps you can take:
Protecting your Personal Finances
Before you worry about anything else, make sure you, your family, and your home are safe and protected. Call a reputable, experienced business attorney in your area and have them help you with this. Your individual finances and situation may require a custom plan of action that an experienced business attorney will be able to develop for your situation.
Be as Communicative as Possible
Making sure you are being completely honest and transparent with your partner during the dissolution process removes a lot of the room for error. What’s more, it helps maintain a positivity about things that will benefit your business in the long run. Ultimately, what’s best for your business is if you remain friendly with your ex-partner so that you can reach out to them if the business may ever need something from them. Being completely open, honest and transparent with your business counsel in all of your communications is also essential.
Make a Plan for Conflict Resolution to Avoid Litigation
There is a good chance a disagreement may arise during the separation process. In a contentious situation, this disagreement may even threaten to derail the entire exit negotiation process and potentially wreck your business. It can be helpful to have implemented a dispute resolution process in the governing documents for your business and in all of your contracts. If you have not previously provided those alternatives, consider amending your governing documents and other agreements to provide for a process that will keep you out of a lawsuit. The court room can be a costly, disruptive and emotionally draining. There can be a winner and a loser, but keep in mind that many times no one really “wins”!
Ensure Your Dissolution Agreement is Legally Binding
This is essential – all the negotiations you went through during your business divorce do not mean anything if they are not memorialized in a legally binding contract that is signed by both parties. An experienced business attorney can help you negotiate your way through the initial discussions as well as the drafting and completion of a legally binding agreement that memorializes these discussions and provides you and your business the adequate protection required.
An experienced business attorney can help you navigate a business divorce, especially when the relationship has not turned out as you anticipated. But there are many more things an experienced business attorney can do besides just this. If you have any additional questions about business partnerships or wish to discuss other related legal issues, call Stephen Rizzieri at 214.434.1017 or fill out the form on our site today.