I Am Afraid of My Business Partner

“Chris, I am afraid of my business partner. Every conversation leads to an argument. He’s being a bully and I don’t know what to do.”

The Bully Business Partner

These are tough situations that require a tough response. Most of my work with business partnerships is bi-lateral meaning that I work with both (or all) partners to find acceptable solutions. When one partner becomes belligerent and refuses to communicate, it is important to protect the other partner.  These situations get pretty close to needing an attorney who can get very expensive. If the obstinant partner is faced with firm enough pushback, a path to a successful exit will generally open.

It’s Probably Time to Get Out of the Partnership

Business differences can usually be worked out. When the respect is gone, it’s pretty hard to change the personality. If a situation gets that bad, where you have a fear of your partner, it’s best to get to work on a fair and liability free exit. If you don’t want to leave the partnership and there is enough money at stake, it may be worth the fight to remove the bully. That means litigation and it’s an expensive process full of uncertainty, but if the business is worth a lot of money, you may choose to take legal action.

Do NOT Be Intimidated by Your Business Partner

Bullies know that if they push hard enough, they won’t get pushback. It’s time for you to dish up a big surprise. You aren’t going to take it anymore. You have rights and you need to exercise those rights. The first thing that needs to be put on the table is a letter from you stating your position. One major point is that your partner is not to make any significant (set an amount) financial decisions without your approval. Further, you want to make it known that you choose to exercise your legal rights which may include bringing suit against your partner.

When your business partner acts like a bully, you must be very firm about your position. You aren’t going to tolerate being frozen out of your own business.

Once you’ve stated your position in writing, it’s time to consider whether you need an attorney. If you choose to litigate, you’ll need a lawyer. If you decide that you want out, that can be handled relatively easily without an attorney unless a lot of money is involved. Attorney fees for a little case will run about $10,000. If you litigate, you can expect fees to go to $50,000 and up. So if your share of the business is worth $10,000, it’s not worth a 5 year, $100,000 court battle. Legal fees are not recoverable if you win. (Usually) That means you must weigh the risk against the reward.

You Have the Power to Close the Business

If your partner refuses to discuss working out your departure from the business, you have the power to close and dissolve the company. You must not be afraid to let your partner know that you will exercise your right to close the business if an agreement is not reached.

Get to the Bank TODAY

The first move that the bully partner will take is to cut you out of banking and accounting. If the bank account is not a joint account, if you are merely a signatory on the account, your partner can have you removed from the business account!
Read more on business banking

You need to get to the bank immediately. If your business account is not a joint account, you’ll need to take action. This might involve an attorney.

Be Safe

We see aberrant behavior in the news every day. If your business partner threatens you, take it seriously. I recommend reporting it to the police. Insist that a report is made and get a report number. That might be useful later. Too often threats are dismissed as ‘heat of the moment’ and later blow up into violence. You may have to insist on a report being filed.

Don’t Go It Alone

Dealing with a business partner that you are afraid of is very difficult. Bullies know what they’re doing. If the bully partner can push you out, they gain a potentially valuable business. Worse, if you walk away, you might get a huge tax bill later—even years later.

That’s why it’s so important that you assert your rights and handle this properly. Get someone on your side who understands the process. Who knows? I’ve seen cases like this actually work out where the partners were able to fix the relationship.

If you’re in a situation like this, I empathize with the stress you’re under. Don’t wait for a ‘good opportunity.’ Act now.

Chris Reich, Business Partnership Mediation

“If you are afraid of your business partner, I want you to remember 2 things: 1) Safety First—If you are threatened, call the police and insist on a report being filed. Get the report number.  2) Exercise Your Rights—Do NOT walk way. You have rights. Get someone to advise and help you. If you cannot handle confrontation, let a mediator or a lawyer act for you.”