Business partnerships form for many different reasons. Maybe you and your brother inherited the family business jointly from your grandfather, or perhaps you and your college roommate started a company together. Although you have long worked together, you believe your partnership has run its course and are ready to move on to something new.
When they work well, business partnerships benefit everyone involved. They allow one individual to make up for shortcomings in their own knowledge or experience by partnering with someone who has worked in a specific industry before. Partnerships often help those with great ideas connect with the financial resources necessary to make a concept into a thriving business.
Unfortunately, when partnerships turn sour, the entire business may struggle as a result. How do you go about ending a partnership when you can no longer work with the other party or the two of you no longer agree about your long-term business goals?
Buy out your partner
Depending on the company’s current circumstances and your financial resources, you might be in a position to buy out your partner.You may have included rules for making a buyout offer in your partnership agreement. If you did not, you may want to look at your company’s current revenue and your partner’s investments to make them an offer.
Let your partner buy you out instead
If you have decided that you want to retire or move on to a different industry, your partner might want to retain ownership of the business that the two of you currently operate together. You need to have an idea of what the business is worth and how much you have contributed to the company already so that you can have realistic expectations for a buyout offer.
Dissolve or sell the business
Sometimes, neither partner wants to continue running the company, at which point dissolving the business and shutting it down may be the best option. You may also be able to sell the business to a third party who wants to take over ownership, allowing both partners to move on from the company simultaneously.
Looking at your different options for ending a business partnership can help you move on from your current business obligations without taking a major loss while doing so.