It can easily be said that a business partnership and marriage have common denominators. All things considered, both work best with similar goals and a sense of teamwork. Unfortunately, sometimes either relationship can fail. In the case of a bad marriage, divorce is the obvious option. So, what happens when it’s time for a business partnership to end?
According to a news article on entrepreneurs, partnerships are even harder to manage than marriages. Obviously, you don’t have to be in love with someone to go into business with them. Nevertheless, personality clashes are often a major reason that partners decide to split. Other times, it may be accusations of nefarious conduct.
What are some other challenges that business partners face that cause them to want to terminate the business agreement? Here are a few:
- One partner feels the other fails to contribute to the workload
- Partner have different long term objectives
- One of the partners is ill or has family problems
- Partners disagree on financial matters
- Partners have conflicting values
Of course, if you are considering terminating a business agreement with a partner, you may have your own reasons. An experienced business law attorney can help you determine how to move forward.
Ending a Business Partnership
First things first. Did you formally form your business partnership? If you signed a partnership agreement, the document most likely addresses how to terminate it. Your attorney will review the paperwork and explain it in more detail.
How many partners are there? Will it be necessary to take a vote to dissolve the partnership? Or, does the partnership agreement specify the manner in which the partnership will end?
Obviously, a division of assets and liabilities is a major consideration when a partnership agreement fails. You will need to determine how profits are split. Also, you and your partner or partners will need to come to an agreement regarding payment of debts incurred by the business.
Next, what about real estate? Does the partnership own property? Is there a warehouse or office lease in the partnership’s name? You will need to make determinations concerning sale or transfer of the lease.
In New Jersey, there are certain documents that need to be filed with the state in order to dissolve, cancel or withdraw a business from the tax records. Once again, an experienced business attorney can make sure you are in compliance.
In many cases, partners are emotionally vested in their business arrangement. As a result, tempers can flair and it makes sense to have a lawyer advocate for you in the process. This includes negotiating the terms of the final partnership dissolution.
The Law Offices of Lawrence M. Centanni has extensive experience helping business clients who need to dissolve their partnership agreement. Contact us to set up an appointment.