A business break-up does not have to be messy. However, sometimes, it is. Many businesses were forced to adjust during the COVID-19 pandemic, closing for weeks, furloughing workers and having a generally difficult time trying to survive.
During the difficult past 15 months, many businesses closed permanently. Along the way, business owners realized that they no longer shared the same vision as their business partners. Philosophical differences may have surfaced and, perhaps, fiduciary duties were neglected. Discussions on the parting of ways took place, disagreements arose and business dissolution was the likely outcome. What are some options in business dissolution? What must be considered?
Protect yourself, prepare for litigation
As a business owner expecting your company to dissolve, you must understand and focus on some key factors that may include:
- Be aware of any hints and signs that a business partner wants to move on. Ideally, you want to part on good terms. However, that may not always happen if tensions and accusations surface. Then litigation is a near certain outcome.
- Ideally, a business break-up should be done quickly. Lengthy and unproductive negotiations in parting ways only complicate matters.
- Have a thorough understanding of the partnership agreement. Review leases, contracts and loans. You do not want to be solely responsible for having to pay in such matters. Protect yourself
- If you see ways to avoid litigation, consider buying out your business partner, selling the business to him or her or even working together one last time in selling the business.
- Contact other professionals such as attorneys and accountants. They can assist you by helping protect your interests, determining the health of the business as well as crafting a dissolution agreement.
A shattered business partnership is not an ideal outcome. However, if this situation does occur, you must be prepared to pursue legal action in order to protect yourself and your company.
