Business break-ups can become very uncomfortable for both partners if there is no plan or agreement in place. Similar to a divorce, a business break-up can not only harm the business itself, but also innocent spouses and kids. Business partners split up for many different reasons. Those can include the death of a business partner, a planned buyout or deal, an adversarial division or a dispute that turns into litigation or arbitration. The last one is the most harmful and expensive business break-up because both parties will have to pay legal fees as they try to win control over the business.
Build a strong foundation on the front-end so you can stay stress-free on the back-end
Business partners should avoid a harmful break-up by investing a reasonable amount of money in building their business on a strong legal foundation. The money spent early on will ensure that the business and its co-owners are protected later on. Creating an Operating Agreement allows partners to plan how they will proceed if one partner wants to buy the other partner out of the business.
If you are starting to sense adversary in your business relationship, you should seek legal help to either avoid a break-up or plan for a peaceful break-up.
More: How to reach a fair agreement during a business break-up.
If you’re thinking about starting a business partnership, take a look at our unique 4-step process for creating Operating Agreements.