When business partnerships turn bad: how to navigate your way to resolution

Editorial Team • November 5, 2017

All relationships, including business partnerships, can go bad.

Running a business with the right ownership team in place is absolutely crucial to your long-term success. And teaming up with the wrong partner is a recipe for disaster.

Before you jump ship, you should determine if the partnership is salvageable.

Consider the following factors;

Review your Partnership Agreement: Sit down with your solicitor and work out where you stand from a legal perspective. Don’t forget to mention the fact that you’re considering terminating the partnership.
Determine your goals: Sit down and work out where you want your business to go but be prepared to share this vision with your business partner.
Create a plan: You’ve determined your goals, now it’s time to work out how you’re going to achieve them. Like your goals, you need to be prepared to share this plan with your business partner.
Schedule a meeting: Once you’ve determined your goals and plan, it’s time to schedule a meeting with your business partner. Go through your vision and make sure you allow time for them to respond.

If you agree to disagree or if your partner does not keep their end of the agreement, then you must be prepared to walk away. You may decide to close the doors, sell the business, sell your share to the partner, buy him or her out or any other option that will allow you to pursue your goals.

Dissolve the partnership

First things first: refer to your Partnership Agreement. Focus on the clause that discusses the dissolution of the partnership. Normally, to dissolve a partnership, one must give written notice to all other partners.

Remember dissolving a business includes completing income tax returns, calculating the tax owed for any capital gains and keeping on top of financial records for the partnership. This is why we strongly recommend getting professional legal and financial advice.

Buy out your partner

There are an array of factors that need to be considered when buying out a partner. This includes getting a business valuation to determine the full value of the business. Once this is established you will have to seek professional advice so you’re aware of all the options available to you and to ensure a fair and legal breakup. This also includes the completion of all the paperwork that comes with it.

Sell the business

If you take this route, you need to establish a closing date immediately. This will give you time to notify your employees, customers and suppliers. By notifying customers it will minimise their inconvenience, and may also maximise your profits right up until the date you close. Remember to end lease agreements, sell business assets and pay outstanding bills and deal with any tax and legal matters. We also recommend keeping a record of documents garnered throughout this process.

Remember, for some companies, the biggest roadblock to growth isn’t a lack of ideas, it is a business partner who has other priorities. More information on our services can be found here .

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