The ending of a business partnership is not the same thing as a marriage breaking up. But there are a lot of similarities.
In both a real divorce and a business partnership divorce, a close relationship has gone bad. Each party might blame the other for the deterioration, and there is likely to be bitterness and hard feelings on both sides. And when each type of relationship splits up, there are a lot of financial questions that need to be answered.
Just like a messy divorce, a business that has not planned for one of its owners to leave can find itself in a lengthy legal quagmire. One way to avoid this is to go into the new business venture with a comprehensive partnership agreement.
What goes into a partnership agreement
Like any contract, your partnership agreement can lay out each party’s rights and responsibilities when it comes to the business and detail how a dissolution of the partnership will happen. For example, you and your partners can agree whether the remaining partners must buy out the withdrawing partner or if the latter partner can sell their interest to an outside party. You can also plan ahead in case a partner needs to be removed from ownership against their will.
Easing the transition, preserving the business
Just like when a divorcing couple has a prenuptial agreement, having a partnership agreement direct terms of dissolution usually saves everyone a lot of time, legal fees and headaches. You cannot know for sure if a dispute will arise in the future. But if you plan for the possibility ahead of time, you can maximize the chances of your business running smoothly after a change in ownership.
