What Do You Do When Your Business Partner Wants to Break Up?

No matter how you proceed, sooner or later, the possibility that a company will end up dealing with a partner exit is high. At the outset, a distinction must be made between different scenarios. Two of the most common are:

• that the partner status is lost without expecting anything in return, something common in the start-up environment and micro-companies; the exiting partner is compensated with the exoneration of any type of future liability.
• Perhaps more commonly, when the separation occurs together with the execution of the right to be compensated for the value of his or her shareholding.
• Exclusion by final court judgement by the commercial dispute resolution law cannot be ruled out when the process has gone to court.

In any of the scenarios, there are five basic rules to keep in mind:

1. Follow the plan; As already mentioned, the smart thing to do is to have defined the exit strategy before starting it, and now the shareholders’ agreement cannot be forgotten. It sets the path to follow, so each party must assume the role and rules assigned to it. It is therefore important that, at the time, this pact was worked from the real agreement of the partners: it is common for one or more of them to give in to the dominant party’s demands on that occasion, and when the problem arises, they object to the execution of an agreement signed, which is always an added problem.
2. Avoid personal confrontation; Every break-up is preceded by months – if not years – of wear and tear in the relationship. When the time comes, there is always an important hidden burden of feelings, and the advice is not to let them surface now, at least not in an uncontrolled way. Comments and actions that could condition the future evolution of the events, for example, by bringing them to court, should be avoided. And to avoid verbal heat, it can be agreed from the outset that communications should be in writing (usually more calm) or through a representative.
3. Trust a professional or mediator; Reality confirms it a thousand times: to break the alliance between the partners in a civilised way, it is best to do so with the help of a professional chosen by mutual agreement. There are times when, for economic reasons, it is not possible to hire their services, an alternative is to choose a friendly mediator, a person close to and respected by the partners who can help in the most conflictive phases of the process. Mishoura can help find the best business litigation lawyers to handle the mediation process in a business breakup.
4. Seek independent opinions; The valuation value of shares and other assets that the partnership may have is always the most contentious part of the negotiation. Again, it is easier if the shareholders’ agreement defines how (and even by whom) this valuation is to be done.
5. Value each decision as a whole; Losing a battle does not mean losing the war; the exit of a partner from the company is usually a long process, sometimes a process of attrition. It is important not to lose sight of the big picture and to be able to compromise on aspects that can lead to a quicker solution to the conflict. It is important to be aware that any agreement will lead to resignation.

Finally, there are many points of view from which the entrepreneur analyses the suitability of that ideal partner with whom to share hopes and dreams, but he does not always remember that his entry must be as prepared and thoughtful as his possible exit. Setting the rules from the beginning is the best way to ensure a healthy relationship between partners.

Mishoura can help provide lawyers that’ll help draft out the best agreements for you and your business partner to help the business achieve its objectives. Ultimately, commercial litigation and dispute resolution is the best way to solve a breakup between business partners.