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?

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“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]

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The Fiduciary Duties of Partners in a Business Partnership

Partners in a business partnership, other than limited partners, have legal obligations to the partnership that are called the Fiduciary Partnership Duties. In this post, we’ll look at these duties and, hopefully, clarify what they mean.

You Can Backdate Agreements in Business Legally

Many people are trying to work out new arrangements with their business partner but find themselves in bad place on the calendar. Despite both parties agreeing to a change, it could take months to worth out the terms. Don’t worry.

Discuss, Agree, and Document How Partners Will Be Paid

This might surprise you. Compensation does not have to be equal in a 50-50 partnership. You can, in fact, do anything you want as long as it’s agreeable with your partner or partners. Read on!

In Mediation Use Sense and Don’t Fight Over Cents

When business partnerships go bad, very often someone wants out. That starts one of two possible processes. The business enters Wind Down and begins the process of closing or the partners start discussing a Buyout.

Funny Friday: Video Conferencing

Video Conferencing is sometimes riddled with issues. If you’re working remotely this should give you a good laugh. Enjoy, Chris Reich

Do Not Stop Working if You Want to Leave the Partnership

When the business partnership breaks down, the darker sides of the personalities come through. A dominant partner turns into a bully. A person who does not do well with conflict will withdraw. As the bully gets more aggressive, the pacifist withdraws further. Eventually, the bully gets so angry they are ready to lock the other partner out. The pacifist quits coming in. The next blowout is over money. The course is as logically predictable as what will happen to your car if you hit the highway with no oil in the engine. It will get louder and louder until the engine seizes.

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.