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What to expect when business partners become business enemies

On Behalf of | Mar 20, 2024 | Small Business

The beginning of a business partnership is often much like the beginning of a romantic relationship. People tend to see one another through rose-colored glasses and dream of the best future possible. After many months of working together to establish or grow a business, their feelings about the business enterprise or one another may shift dramatically.

Unfortunately, those who start a new business venture in hopes of a positive future may end up battling with their business partners. Those who dreamed of achieving organizational success together may now feel like their partnership has held them back from success or career growth. When a partnership takes a turn for the worst, there could be many dire implications for the business involved.

What usually happens when partners can no longer work together?

Business dissolution

Sometimes, the easiest and fastest way of severing a toxic business partnership is to dissolve the company. Particularly if someone worries that continued business operations may expose them to legal or financial liability, taking the necessary steps to formally terminate the business itself could be the best response to a struggling partnership arrangement. Dissolution can help pay off business debts and terminate legal responsibilities to outside parties, thereby allowing each business partner to move on with their career or new entrepreneurial endeavors.

A partnership buyout

Sometimes, there is an issue between the partners but not necessarily with the company. One partner may make up for the failings of the other. The partner who has made the biggest investments in the company may decide they want to buy out the other. Following any rules outlined in the initial partnership agreement can make it easier and faster to arrange a buyout.

A civil lawsuit

Occasionally, one party’s incompetence, contract breaches or misconduct have financial implications for their business partner. Particularly in scenarios involving self-dealing and embezzlement, one partner may feel compelled to take legal action against the other. Someone who has intentionally damaged the jointly-owned business could be legally and financially responsible for the consequences of their actions. The courts may award one partner financial compensation for the misconduct or professional failings of the other.

Oftentimes, those frustrated by a struggling business partnership need to review their agreements and the status of their company to choose the best solution. Having the right support and navigating complex business-related legal matters may benefit those who have invested time and money in the creation of a business with a partner only to discover that their partnership no longer works.