Business partners should establish an exit strategy early in the partnership
Most business partners don’t expect their partnership to fail, but in reality, up to 80 percent of business partnerships fail. Therefore, it’s only fair for both parties to anticipate a break-up.
Once business partners decide to split up, they should go back to the Operating Agreement and move forward according to the exit strategy they’ve established at the beginning of their partnership. If there is no exit strategy, the Operating Agreement can still function as a guide to settle any disputes. Partners who don’t have an Operating Agreement in place will most likely struggle to solve issues quickly, or even pay large amounts of money to hire an attorney for each party.
It’s important to establish legally binding expectations at the beginning to avoid unnecessary costs. If there is no exit strategy, business partners can decide to split their costs of dissolving the business, including legal fees. This will also serve as a documentation that both parties have agreed to end the partnership.
It’s beneficial to communicate your goals and feelings throughout the partnership, so a break-up can be anticipated more easily. Honesty and transparency are essential elements of the communication process. Lastly, if your partnership ends in a hostile dispute, stay reasonable and kind. Sometimes it’s smarter to be generous instead of risking litigation, only because you want to get even with your partner.
What experts have to say about business partnership breakups.
Taking care of formalities early in a business partnership saves you from possible legal battles later on. Learn more about our 4-step process of creating Operating Agreements at http://speralaw.com/louisiana-operating-agreement