Dissolving a Business Partnership: Legal Steps and Considerations

Dissolving a business partnership can be emotionally and financially painful. Some have even described the process as comparable to getting divorced. When individuals form a business partnership, they usually agree on all the major business issues. Partners may not anticipate the partnership breaking down because they’re on the same page when it begins. 

Unfortunately, business relationships deteriorate more frequently than many of us realize. Disputes between the partners can arise, the business circumstances could change, or one partner may decide to leave or retire. Dissolving a business partnership can be a complicated legal process, and understanding the steps in the process can help you navigate it effectively.

1. Carefully Consider the Partnership Agreement

If you are considering dissolving your partnership or you’ve already begun the process, considering your partnership agreement is an essential first step. Ideally, you will have started your partnership by drafting and signing a written partnership agreement. The partnership agreement should include a clear exit strategy detailing the procedures each partner needs to follow to dissolve the partnership. 

The agreement should also address issues such as handling existing customers, which partner should keep which business assets, and what will happen to the commercial property. If you have an LLC, you should review your operating agreement. An attorney can help you understand your obligations under your contractual agreements.

2. Try to Resolve Disputes Effectively

Tensions can be high when navigating disputes between business partners. You may think litigation is inevitable because you cannot resolve your disagreements. However, in many cases, partners can resolve their disputes out of court. Negotiating an amicable resolution through mediation or arbitration may save you significant money and protect your personal and business reputation.

3. Consider Your Ideal Outcome and Work Toward It

As you begin the negotiation process, having your ideal outcome in mind is essential. What would you like to happen at the end of the dissolution process? Write down your goals and then discuss your desired outcomes with your business partner. Instead of trying to sabotage each other, you can work towards reaching your future goals.

4. Consider Your Current and Future Customers

Keep sight of the needs of your customers or patients, especially if you are in a contentious dispute with your business partner. Your professional reputation will be on the line. If the disagreement leads to clients feeling like they’re being treated poorly or neglected, even if you don’t intend to do so, your prospects in your industry could be damaged. Maintaining professionalism and working toward the goal of dissolving the partnership as amicably as possible may help you retain customers in the future.

5. Consult with an Experienced Attorney

Dissolving a business partnership can significantly impact you personally and as a business owner. Working with an experienced attorney can help you protect your rights as you move through the process. 

The South Carolina business Attorneys at Willcox, Buyck & Williams, P.A. are here to provide you with experienced legal counsel. We will help you understand your options and work with you to ensure you dissolve your partnership properly. We will work diligently to resolve your partnership’s dissolution amicably.  

When necessary, our experienced litigators are prepared to represent you in court. If you are going through the dissolution of a business partnership, don’t hesitate to contact Willcox, Buyck & Williams, P.A. to schedule an initial consultation with one of our skilled attorneys.