A partnership can be a strong business structure that sets up your entrepreneurial endeavor for success. Yet, even if you take the time needed to develop a strong partnership agreement that aligns your vision with those of your partners, you’re bound to face disagreements at one time or another. Some of these disputes are easily resolved through intentional communication, but others are so contentious that simply talking the issue out in an informal manner isn’t going to resolve everything.
But you need to find a way to resolve your partnership disputes, even if they’re deeply ingrained. If you don’t, then the animosity between you and your partners can disrupt business operations and put your business at risk of going under. While this can be an emotional blow given the hard work that you’ve put into building your business, it can also take a massive financial toll on you and your family.
So, what’s the best way to address a partnership dispute?
Before throwing in the towel and giving up on your partnership, you should consider the various options available to you when it comes to resolving even the most heated disagreements. This includes:
- Amending the partnership agreement: Sometimes a partnership dispute can be quickly addressed by modifying the existing partnership agreement. To figure out the best way to amend the agreement, though, you’ll want to negotiate the change with your partners. This will require the ability and willingness to sit down to hash the matter out informally. If that’s not possible, then this option might not be right for you.
- Using mediation: When opinions are solidified, it can be hard to talk through complex business matters on your own. This is where mediation can prove beneficial. Here, a neutral third-party helps you and your partners identify the issues underlying your dispute and possible solutions to the issues at hand. Mediation thus helps facilitate effective communication while still giving you a say in how the issue is ultimately resolved.
- Litigating the dispute: If you and your partners can’t hash out your differences by talking through them or changing your partnership agreement, then you’re probably going to have to take the matter to court. For example, if there’s been a breach of contract or a breach of the fiduciary duty, then proceeding with business litigation might be the only way to protect your partnership and recover any compensatory damages that you and your business have experienced.
- Buying out the partner: When a problem can’t be resolved, one option is to simply buy out the partner who is causing conflict. This can be a complicated and sometimes costly process, but your partnership agreement should provide some guidance as to what the process will look like.
- Dissolving the business: When the options mentioned above don’t work, then you might be left with dissolution as your only resolution. Winding down your business can be an emotional blow, and the logistics of it can be difficult to navigate, but having support and guidance throughout the process can make it easier.
Competently navigate your partnership dispute
If improperly handled, a partnership dispute can derail your business and your finances. Don’t let that happen to you. Be prepared to address the partnership challenges you’re facing by knowing your options for resolution and how to utilize legal strategies to your advantage. By doing so, you’ll hopefully protect your business and ensure that your partnership disputes are resolved as favorably as possible.