Starting a business with a partner can be a strategically legitimate decision for certain entrepreneurs. For some, a partner may contribute much needed start-up capital. Others may highly value a potential partner’s complementary skill set.
That said, there may come a time when the partnership must end for one reason or another. Perhaps the business was unsuccessful, or the personal relationship between partners has deteriorated to the detriment of the company. Whatever the reason for dissolving a partnership may be, there are some ways to make the process a little easier.
Have and refer to your partnership agreement
One of the most important tools at your disposal can be your partnership agreement, so make sure you have one in place, regardless of the type of partnership you have. It should describe a dissolution framework you each agreed upon at the outset, when you were on good terms. Partnership agreements, operating agreements, and shareholder agreements can minimize or even eliminate the risk of costly legal battles and unreasonable expectations.
Keep it clean
Making a clean break can be difficult but necessary. Don’t spend months or years in a fractured arrangement. Once you make the decision to terminate the partnership, move forward.
Further, while it may be tempting to mudsling when partnerships end poorly, the fact is that doing so can only make the breakup longer and more costly in both dollars and anguish. Focus on being reasonable and fair.
Bring in the professionals
There are myriad legal and financial matters involved in a partnership dissolution. So it is wise to work with professionals experienced in these areas. These parties can provide insight, advice, and skills into a situation in which you have little or no experience.
Trying to terminate a partnership informally or without help can lead to unnecessarily difficult negotiations and costly missteps. Avoiding these can also help preserve whatever personal relationship may still exist.
Change can be tricky; taking these steps to make the road ahead a little smoother can make it easier for everyone to adjust.