Business Partnership Advisor
Together, we can fix your business and partnership problems
Chris Reich, Business Luminary

How to Get Out of a Bad Business Partnership

If there is no Partnership Agreement in place, the process for getting out of a business partnership is fairly open. That also means that the price and terms are fully negotiable.

You Want Out!

You probably want out of the business because of differences with your partner. People don’t usually want to leave a great situation unless there is a critical need for cash. We have to start by looking at your business documents to see if there is a provision for a voluntary exit. If there is no provision, maybe there are no documents at all, you can negotiate your exit. What can be done? I always tell my clients that we can do anything that is legal, ethical, and agreeable.

Use Your Head

Before you tell your partner that you want out, you want to have a plan that the business meaning your partner(s), can afford. It makes no sense to demand $10 million for your share of a failing business.  Making a big demand on your partner will make her defensive. Don’t start throwing out a number with the idea that you can always come down. Once the other side gets into negotiation mode, tensions will soar. I recommend that you not open your exit talks until you have thought it through. You should have a basis for your amount, something that can be supported. I can help you develop an informal appraisal.  Just don’t place demands on your partner for big payouts and the situation may get a lot worse.

It can be very hard to get out of a business partnership. Approach your exit wisely and you can come out whole.
Chris Reich, Business Luminary and Partnership Advisor

What Are the Issues?

If you want to do something else and are tired of your business, an exit is reasonably easy to complete. If there are problems between the partners, we’ll need to look at all the facts. I have worked with people who wanted out of their business because their partner was breaking the law. Often, partners have different visions for the future of the business. All of these can be handled. If you want out, you want to avoid having your buyout land in court. That’s very expensive. Courts don’t settle arguments. A judge can order the business to be dissolved. No winners. You want out; you don’t want a 5-year legal battle costing hundreds of thousands of dollars, right?

Did You Like This Post? Would You Please Rate It?

Click on a star to rate it!

Average rating 4.6 / 5. Vote count: 87

No votes so far! Be the first to rate this post.

4.6
(87)
“When you want out of a business partnership, the worse thing you can do is demand huge amounts of money to leave. While you’re thinking the price can always come down, your partner may go to an attorney rather than negotiate with you. Now you have a fight, an expensive fight.”

Where to Start

  • Because whomever you work with will want to review your business documents, get them copied and scanned
  • Make notes about your issues with your business partner
  • Think about and write down what you want for your interest in the business
  • Write out your terms (include what you will or will not accept). Consider if you will accept payments, etc.
  • Get neutral advice

That last one is a hint to call me. Your friends are going to try to support you by encouraging a high price for your share. You need impartial advice. I don’t judge, I facilitate. Call me.

Chris (530) 467-5690  [email protected]

Do you like FREE services? Contact me now for a 100% confidential and 100% FREE consultation.

Prefer a direct approach?

Email: [email protected]

Phone: (530) 467-5690

How to Draft Resolutions to Strengthen Your Partnership

I recommend that partners talk through a specific issue and then draft an agreement (called a resolution) that sets a policy. You can keep this in a binder to serve as amendments (or foundation) to your Partnership Agreement. In this post I’ll explain how to talk about things that bug you with your partner and how to draft a binding resolution to fix the problems.

When Politics and Business Partners Don’t Mix

Unless you are in some sort of political business, you should keep politics out of your establishment completely. Of course, you have freedom of speech, but we are in very contentious times and displays of political or religious positions might be off-putting to to your customers.

Relatives Should Never Keep the Books in a Business Partnership

Even when people get along well, having one partner’s relative handling the books just isn’t good policy. There is an inherent conflict of interest.

About Documenting Partnership Expectations

Many partnership disputes begin around expectations not being met. But were they ever defined in the first place?

5 Points to Consider When a Partner Is Locked Out Of the Business

Locking a partner out is a risky move. The locked-out partner has rights that if violated could entitle him to reinstatement and damages.

What Should Be Included in Your Partnership Agreement

There are many things to cover in a solid Partnership Agreement. In this video, I’ll explain the items that need to be covered. You may have other items to include as well. Keep in mind that there are many ways to address each clause. My job is to offer you options and to help partners agree on how they want to address every line item.

Protect Your Interests with a Partnership Agreement

Your Partnership Agreement protects your interests. Ideally you would go to a qualified business attorney and have the proper legal document drafted. But if you are putting it off because of the expense, you can get the key items on paper to protect you and your business.

It May Be Legal to Lock Your Partner Out of the Business

There are times when you legally can and should lock your partner out of the business. But, those are rare circumstances. Locking your partner out, even if your partner is showing bad behavior, open you to potential liability.