5 tips for ending a family business partnership

On Behalf of | Dec 7, 2020 | Business Disputes |

Running a family business isn’t easy. Your parents may have spent years building your business’ operations and services for the business to succeed. You may have spent long hours, over decades, to ensure your business kept up with changes in your industry, so you can pass the business on to the next generation in your family. You also have had to navigate family dynamics during those years – dealing with learning how to be your brother’s manager or fire a cousin who was slacking on the job.

Now, you have an even more difficult challenge. You and your siblings are in a dispute about the future of the business. Your siblings want to sell your family auto repair shop or home renovation business and move on. Your heart breaks at even the thought of it. How are you going to move forward?

Here are five tips for dealing with ending a family business partnership:

1.       Try to understand your siblings’ point of view and give them grace for wanting to end their partnership in the family business. Remind yourself of their contributions over the years and thank them for their help in keeping the family business alive.

2.       Understand that this process will be difficult emotionally, but you need to prepare for the financial impacts too. You need to know how much your business is worth and what business assets your siblings are entitled to. You need to make a plan for buying them out and how to minimize the financial impact of that on your business’ bottom line.

3.       Get another party involved. You should seek the help of a business litigation attorney to end a business partnership with your siblings. You want to ensure your interests in the matter are well-represented and you work toward ending your partnership with your siblings out of court if possible.

4.       Be honest with your siblings and ask them to be honest with you. You don’t want to be blindsided if one of them decides to open their own business, a competitor to yours, in the near future.

5. Seek emotional support from close friends or a counselor. You may need extra support to process your feelings about ending your business partnership from your siblings.

Ultimately, you want to try to preserve your relationship with your family members after they exit the family business. You also want to avoid spending so much time and money negotiating the end of your family business partnership that it negatively impacts your family business. You will need to try to separate your emotions as much as possible during this difficult transition in order for that to happen and be able to move forward if some of your family relationships break down because of ending your family business partnership.