Posted by John P. Palen, CEO of Allied Executives
Small conflicts can lead to big ones if left to fester
and persist. Partners who can maintain professional respect and appreciation
for each other can sometimes work out issues without breaking up. Once you
start losing respect and value for one another, it leads to deeper resentments
and issues down the road — and negative impacts on the business.
Despite all your best efforts, sometimes a partnership
has to end. The best break-ups are anticipated with a solid buy-sell agreement.
The alternative is to spend a ton of money on attorneys and court fees to sort
out the loopholes and missing documentation.
Whether you have two partners or several in a business,
the first step in a break-up is to review the rules of the buy-sell agreement
for procedures to split operations, dissolve the partnership or buy out one or
more partners — whichever route is preferred among the partner group. It will
be quickly evident if the agreement doesn’t clearly spell out the rules for the
preferred outcome, and that’s where attorneys will need to sort out the next
steps.
For this reason, it’s important to clearly spell out all
possible scenarios for a business partnership break-up. Be careful of your
choice of advisors for drawing up the buy-sell agreement and other legal documents.
Choose advisors who have seen business break-ups before and understand the
language and rules that will protect partners from needless stress or expense
in a break-up.
Ultimately, any business break-up will have its share of
loss or bad feelings. But you can minimize the pain by sticking to the facts of
the break-up and leaving emotions on the sideline until a resolution is
discovered, vetted and confirmed by all partners. Just as you would maintain
professionalism with customers, keep your relations above board in a business
break-up — and live to do business another day.
