HOW TO MAKE DISSOLVING A KANSAS PARTNERSHIP A PEACEFUL TRANSITION
On behalf of Hyland Law Firm, LLC posted in Kansas City business law attorney on Friday, May 2, 2014.
You and your business partner started your company 15 years ago. Together you saw your business grow from just a spark of an idea to a fully functioning and profitable company. When you started the business, you had zero employees and only a few loyal customers. Now, your business has a faithful following, a website, and a few dozen employees. You think to yourself, your business is finally on 'easy street'. That is, until your business partner tells you he or she would like to leave the business. A partner exiting a business can be a challenging transition. But it does not have to expensive or litigious. The following is a list of tips that can help ensure a peaceful transition:
Determine the reason for the partner's exit: If the two of you have been business partners for a lengthy amount of time, the partnership can feel like a marriage. Having a person communicate that he or she wants out, especially if it is unexpected can come as a complete shock. Before doing anything else, first determine if the partner really wants out or if he or she thinks exiting the business is a solution for a different problem, such as over-worked.
Listen to his or proposal: An exiting partner may have a precise wish list he or she wants to leave the partnership or he or she may not have a concrete idea. It is important to find out where he or she is at in the process. You will also want to determine what his or her thoughts are for a proposed time line for leaving. Is this an immediate departure or can he or she take 6 months or even a year, if necessary to make the transition?
Be nice: Do not reject or rebuff a partner's exit offer immediately upon hearing it. It is often best to take some time to thoroughly review the offer. A snap decision or saying something to offend your partner can come back to bite you-and possibly lead to litigation.
Review the partnership agreement: Make it a top priority to review the partnership agreement as soon as possible upon learning that your partner wants out. A well-drafted partnership agreement often contains an 'exit clause' or how a severance should be handled. If not, the agreement should at least have a clause that states how disagreements should be addressed.
Speak with an attorney: Talking with an attorney is a great way to save yourself a lot of time and money down the road. An attorney can help separate the emotions from what needs to be a business deal. Your attorney may also suggest that you and your partner attend mediation with an experienced mediator to reach an amicable solution.
Keep your eyes on prize: Opting to give a little more than you originally wanted may not be a bad choice if that means being able to avoid litigation. The quicker this transition is resolved, the quicker you can return your focus and time back to the task of running the business. Quite often business owners discount the amount of time and money that can come with litigation. Businesses can suffer while angry partners are consumed with fighting.
If you or one of your business partners is contemplating retirement or exiting the partnership, it is wise to speak with an experienced Kansas Business Attorney who can assist in the process. To set up a free and confidential consultation, contact Kansas Business Law Attorney Charles Hyland at the Hyland Law Firm, LLC today. Charlie Hyland is a seasoned business litigation practitioner who understands the delicate nature of business partnerships and can help ease this important transition. The Business Law Attorneys at the Hyland Law Firm have worked with countless business partners to help ensure the smoothest of transitions, so that you can focus on what your business does best-servicing its customer base.