Forming a company by establishing a business partnership can be a clever decision. A successful partnership takes the pressure off of both of the people investing in the organization. Both partners bring resources and unique professional skills to the organization that can help it thrive.
Each partner can enjoy the benefits of having someone else working to establish and grow the company instead of shouldering all the work on their own. Eventually, business partners may find themselves disagreeing about what the company requires or the next step to take for business development. When they cannot resolve those disagreements, they may not want to work together anymore.
Do those who want to end a business partnership need to dissolve their company, or can they buy out a partner instead?
Every partnership leads to unique challenges
There is no one solution that is the ideal resolution for every partnership dispute. Sometimes, the best option is to dissolve the business. In cases where the company doesn’t grow or produce sufficient revenue, both partners may simply want to move on to new opportunities.
Other times, the issue may be that the partners no longer agree on what should come next for the business. Perhaps one partner wants to sell the organization to an outside party interested in the company while the other wants to continue growing and independently operating the business.
In such scenarios, the partner who wants to sell the company might agree to sell just their interest in it so that the other can continue trying to develop the organization. Factors including the investment previously made in the organization and the amount of work required to operate it without a partner can influence whether dissolution or a buyout is the better option.
In scenarios where one partner proposes a buyout, they need to make sure that the terms they suggest are reasonable and that they comply with any standards established in the initial partnership agreement. In dissolution scenarios, the partners may need to cooperate to dissolve the business, settle its obligations and liquidate its assets.
Exploring an issue that has led to a potential business transition with a skilled legal team could help a partner evaluate their choices. Those who approach their partners with clear proposals to address current organizational issues may increase their chances of securing their desired outcome.