Your business partner will have a direct impact on your personal financial circumstances and the overall success of your company. If your partner suddenly stops performing the way that they historically have, your company’s profit margins could shrink, reducing your take-home revenue. Maybe you think your partner has embezzled or just that they have failed to fulfill their obligations to you and the company that you started together.
Sometimes, business partnerships go through difficult periods, only to eventually recover and get better again, much like any interpersonal relationship. However, some business partnerships will suffer irreparable damage, much like a marriage can, due to a violation of trust.
Some people feel like their only choice is to dissolve the company and start over. Others will continue trying to make the business work even though they would prefer to cover ties with their partner. A business divorce is essentially a partnership breakup in which you or otherwise find a way to move on with your business without them involved. Before you talk to your partner about a business divorce, there are two steps that you want to take.
Look over your business plan and partnership agreement
The two of you have likely addressed the possibility of a buyout in your business documents already. You may have agreed to certain terms for a partnership buyout or imposed rules about what the process will entail and when either of you can assume sole ownership of the company.
You don’t want to hire an attorney and put together paperwork only to face a lawsuit brought by your former partner because you violated your partnership agreement. It is crucial that you abide by any rules you included in those documents during the business divorce process.
Perform a careful financial review
You won’t be able to make a reasonable buyout offer while still protecting your financial interest unless you know conclusively what the company is worth. Performing an in-depth evaluation and a review of recent sales, as well as projected future revenue, we can help those contemplating a business divorce prepare an offer that their partner may willingly accept and that the company can afford.
Like a marital divorce, a business divorce is easiest and most affordable when it is amicable. Looking for ways to cooperate with your partner rather than to fight them tooth and nail could leave your company in a better position following a business divorce.