The prospect of starting a new business venture with a partner can be exciting and also nerve-wracking. With the best intentions in the world, your combined talents and shared aspirations and goals seem like the perfect springboard from which to launch your business together. Sadly, however, sometimes the partnership doesn’t go as well as you had planned and it is at this point that you might have the realisation that you want to leave. In this article, I want out of my business partnership, we look at the reasons why this might happen and what to do if it does.
Free Initial Telephone Discussion
For a free initial discussion on how we can help you with exiting your business, get in touch with us today. We will review your situation and discuss the options open to you in a clear and approachable manner. Early expert legal assistance can help ensure you are on the best possible footing from the start and also avoid the stress of dealing with these issues on your own. Simply call us on 0345 901 0445 or complete our online enquiry form and a member of the team will get back to you.
What to look for if you feel the partnership is in trouble?
There are a number of signs that would indicate that all is not well with your business partnership. These can include:
- The feeling that one partner is doing more work than the other.
- Sometimes one of the partners thinks his contribution to the business is worth more than the other’s and wants more money.
- There is a disagreement in which way to move the business forward.
- One or both of the partners has come to the conclusion that there is animosity and friction between the parties.
- One of the partners has simply lost interest in the business. What started out as an exciting prospect can soon become routine and boring.
- The personal circumstances of one of the partners may have changed.
What to do next if you definitely want to exit the business?
If you’ve sat down with your partner in an amicable and open way to discuss the issues and you still can’t see a way forward, it may well be time to exit the business.
Under these circumstances, the commonest way to leave is by having the business valued to see what your interest is worth. The remaining partner would then be offered your shares to buy. If he or she can’t afford to buy them, they can be offered to third parties but if you have a shareholders and/or partnership agreement in place, there might be provisions for this contained within the documents.
If your business partner either can’t afford to or doesn’t want to buy you out and the business is able to continue in different directions, it may be possible to divide the company’s interests. This could then create two new businesses whereby each partner owes 100% of the shares. The reality of this option is that it only really works in certain industries as it can be quite difficult to make clear distinctions on all aspects of the business and also customer share.
Where separating the business involves agreeing the rights to intellectual property it will be necessary to account for this in the financial settlement. Either the rights are assigned to one business as a separate entity, or you may agree to pay your former business partner a royalty based on future earnings from their share of ownership of the intellectual property.
The practicalities if you can’t agree
If you have exhausted all attempts at resolving any disputes and you can’t come to a sensible compromise as to how an exit would work, the way forward is by closing down the company, paying off all outstanding loans and debts and distributing any remaining profit if any. Reference to your partnership agreement and shareholders agreement along with reference to your articles of association will provide guidance for this mechanism. It is at these moments that the importance of having these documents carefully drafted in the first place becomes apparent.
How we can help
We have a proven track record of helping clients exit their business. We will guide you through the process and ensure all checks are carried out swiftly and efficiently and we firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.
How to Contact our Corporate Solicitors
It is important for you to be well informed about the issues and obstacles you are facing. However, expert legal support is crucial in terms of saving you money and ensuring you achieve a positive outcome.
To speak to our Corporate solicitors today, simply call us on 0345 901 0445, or allow a member of the team to get back to you by filling in our online enquiry form. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.
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