When you start a business with a friend, family member or business associate, you may expect that partnership to last throughout the company’s life. Unfortunately, for many companies, this is not always the case.
When business partners split, it can feel as complex as a dissolved marriage. How you handle it, however, can make a difference in your business’s future.
Try to understand the situation
About 50 to 80% of business partnerships fail within the first few years of a business. If your business partner joins the statistics, you must determine the reason behind the decision. Maintain open communication to discuss the concerns and reasons for wanting to exit the partnership. Make sure you listen actively, without interruption, to grasp the perspective fully.
Review the partnership agreement
Next, review the partnership agreement established when you formed the business. This document outlines the terms and conditions regarding the partnership, including provisions for partner exits. Pay close attention to clauses related to partner withdrawal, buyout procedures and the distribution of assets.
Negotiate terms amicably
Once you understand the situation and terms outlined in your agreement, negotiate the terms of your partner’s departure. Approach the negotiation process with fairness. Consider factors such as the partner’s investment in the business, his or her contributions, and the company’s market value.
Develop a transition plan
Once you finalize your partner’s departure, develop a transition plan to ensure a smooth exit process. The plan needs to outline the steps to transfer the partner’s responsibilities, assets and obligations to the remaining partners or to a new partner.
Following your partner’s departure, focus on moving the business forward positively. Reassess your business goals, strategies and operations to overcome the challenge of your partner’s departure.
