Going into business with one or more partners can be a great relief. That’s partly because you are not solely responsible for the business’s formation, operations, and ultimate success. But any relationship can have its difficulties, including partnerships. Some disagreements are unavoidable. However, early action could help you avoid partnership disputes that end in the dissolution of your company.
Conduct Your Due Diligence
As you assemble your business plan, you will research your industry and market conditions. However, perhaps your due diligence should also extend to your future partners. Ask yourself questions like:
- Do you have the same vision?
- Are your management styles compatible?
- When it comes to work ethics, are you compatible?
- Are there any red flags in your future partner’s background?
- Does your future partner have a good credit history?
Identifying problems upfront could prevent partnership disputes after your business is up and running.
Formation Documents Could Help Avoid Partnership Disputes
A strong partnership agreement is a must. Your agreement could spell how responsibilities, rights, and dispute resolution methods. For example, you might decide that one of you has primary responsibility for research and development. Including this division of duties could help avoid partnership disputes later. At the very least, you will be able to use the agreement to shore up your position.
Here, again, pre-emptive action could minimize or even avoid partnership disputes that spiral out of control. This is also not the time for do-it-yourself legal agreements. Talk to an experienced business attorney about your partnership agreement before either you or your partner sign it.
Buy-Sell Agreements – A Necessary Document in Multi-Owner Businesses
This legally binding document describes how to handle your business interests if an owner leaves the company. Business operations can be disrupted if a partner leaves for any reason, including the following:
- Divorce
- Bankruptcy
- Retirement
- Incapacity
- Death
But how will a buy-sell agreement help you avoid partnership disputes?
It might be most helpful in companies with more than two partners. If the time comes that one of the partners leaves, you and your remaining partners will know how to handle the departing owner’s interests.
The best time to prepare your company’s buy-sell agreement is at the beginning. However, if your company does not have a buy-sell agreement, you can negotiate and prepare one at any time.
Call to Discuss How You Might Avoid Partnership Disputes
There is one additional way to avoid problems that could potentially devastate your partnership. Address problems as they arise. Rather than waiting for a situation to explode, attempt to resolve it amicably. Your attorney could help with that, too.
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with business and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.