It’s happens to the best of friends, general acquaintances, as well as family members. So, you’ve come up with a harebrained scheme or something that’s a genuinely good business concept, but after putting it all together and operating for a while, the ownership partners fall out of good graces with one another other.

Don’t take our word for it. The average startup company breaks up at a rate somewhere between 20 to 30 percent higher than married people divorce at, which was 50 percent last time we looked.1

How Dissolve a Business Partnership Amicably

How to Successfully Separate from a Bad Business Partner | Denver Business Law Attorney

How to Successfully Separate from a Bad Business Partner | Denver Business Law Attorney

The following is list of five precautionary steps, tactics, and actions to take to ensure you end a business relationship with a partner on the best footing possible:

  • Create A Well-Rounded Business Contract – When creating a business contract, it’s important to plan for the worst as well as the good fortunes to come. Have a heart-to-heart with your business partner and make a list of personality traits – good and bad — and how to deal with them. Even the best intended minds can get wires crossed with others. Make as many clauses in the contract as possible that would allow for the restructure of the ownership or buyout of another partner at a fair market value, if the personalities, decision making abilities, and working styles begin to clash. Because once pleasantries get tossed aside and shady subterfuge takes over, partners will find it impossible to reconcile differences. Creating prenups or separation clauses can force everyone to play nice. So, just remember hope for the best, but plan for the worst, too.
  • Keep It Professional – If a business partnership starts to sour, a lot of negative energy can occur, especially when personal emotions are involved. Both partners may feel they have a lot of sweat equity poured into their business, and some might look at a crumbling business or partnership as way to start taking down their partner. Don’t do it, because we’ve seen way too may lawsuits arise as a result. Try and leave personal feelings out of separation negotiations. Give yourself time to calm down, before coming to the table. Because making a business decision when you are angry or feel betrayed may not be the best time to complete a business decision. Ending a business relationship on a bad foot can lead to a lawsuit followed by a counter-lawsuit, which will just end in everyone losing a bunch of money.
  • Weigh the Benefits of a Buyout – Sometimes there’s a way to salvage the partnership, but sometimes it’s just impossible. You might even have the foresight to put a clause in your business contract for there to be a silent partner, who just receives royalties for stepping aside. There’s a lot of ways to structure a buyout.
  • Share the Costs of Dissolving Business – When the legal bills come due, if you and a partner decide to split, you should share the costs evenly or as laid out by the percent of ownership each partner has.
  • Hire Denver Business Attorney – The very moment one of the partners uses language like “it’s time to dissolve the company,” that should be your queue to hire a knowledgeable and aggressive business attorney. Hiring an attorney will also allow you to keep any animosity at bay, so that your attorney can also act as a mediator.

Contact a Denver Business Law Attorney at Lohf Shaiman Jacob Hyman & Geiger

Have you and your business partner hit the wall, and can’t seem to find any reasonable solutions to keeping the business operating under bother owners? Then you may need to contact the Denver Business Law Attorney at Lohf Shaiman Jacobs Hyman & Feiger. We can help you negotiate for a more cost-effective way to dissolve your partnership than suing each other. We can either help settle the dispute amicably, or we can help mediate on your behalf so that you get a fair separation, while keeping the integrity of your company operating smoothly. Sometimes it becomes impossible to keep out of the courtroom, in which case we have the litigation experience to put you in the best possible position for a successful settlement or business dissolution.

To learn how we can best serve you, call us at (303) 974-4411 or send us an email using the contact form on this page.

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1“How to Break Up with Your Business Partner the Right Way” published in Entrepreneurs, May 2017.

By | 2017-10-31T20:19:55+00:00 December 21st, 2017|Business Contracts, Business Law, Dissolving Business Partnerships|