Business partnerships can end for all sorts of reasons. One of the partners may have a shift in their personal needs or goals (i.e. having a family, wanting to change industries, etc.). Other partnerships end over a matter of contention (unprofessional behavior, poorly job performance, etc.). Yet, regardless of the reasons, ending a partnership can be a complex process, and there are numerous pitfalls that can cost one or both parties a great deal of money. Learn how to mitigate against such issues, and discover how a seasoned business law attorney can help you survive the end of your business partnership.
Protecting Your Business Before the End of a Partnership
While partners do not typically enter a business together, thinking it will one day end, it is highly encouraged that they anticipate and effectively plan for its eventual end. Not only does this make ending the partnership easier, should the need arise, it can also protect the interests of the partners and ensure the continuity of the business. Additionally, partners are encouraged to revisit their original agreement when needs change or the company grows, as this can ensure the exit strategy always reflects the business’s most current goals, profits, and vested parties.
Business Valuations and the End of a Partnership
While an exit strategy will typically address most matters involved with ending a business partnership, there are elements to the process that must still be completed. One such item is an accurate valuation of the business, which accounts for all the company’s debts, assets, and projected future profits. Partners are encouraged to seek their valuation from an appraiser that they can both agree upon, instead of just one partner simply choosing an appraiser, as this can minimize the risk of a slated valuation that benefits only one of the vested parties (i.e. inflating the company’s debts to keep more of the money within the business).
Deciding How to End Your Business Partnership
There are numerous methods that partners can use to end their relationship, but most require that the business either buy out the exiting party completely or make scheduled payments at pre-determined times. Businesses that need to preserve money for growth or are still new may benefit most from scheduled payment increments. Those that have the ability to make a complete buyout may benefit more from simply dissolving the partner completely. In either case, it is critical that parties discuss their options and the potential ramifications with a seasoned legal professional, as there are pros and cons to each method.
Contact Our Wheaton Business Law Attorneys
Whether you need assistance with developing an exit strategy at the start of your business or need help with dissolving a business partner, Stock, Carlson, Oldfield & McGrath, LLC is the firm to call. Backed by more than four decades of experience, our DuPage County small business lawyers work hard to protect the interests and financial futures of our clients. Start by scheduling a personalized, no-obligation consultation. Call 630-665-2500 today.