Ending a business partnership can be challenging, especially when you don’t have a written exit strategy in your partnership agreement to guide you.
Without an agreement in place, you and your business partner will have to explore other options. Here are three potential courses of action you can take:
You can buyout your partner
If the business is still viable and one of you simply wants out, a buyout might be feasible. One option for ending your partnership is a buyout. That means one of you would buy the other’s share of the business. This is only possible, of course, when you can both agree upon the price and one of you has the necessary financial means.
You can sell the business
If neither of you wants to keep the business or there’s no financial possibility of arranging a buyout, you and your partner may agree to put the business up for sale. Then, you would divide the profits (or losses) between you. It’s crucial to ensure that the sale price is fair and to have a plan in place for dividing the proceeds or remaining debts.
You can dissolve the business
If you and your partner cannot agree on a buyout or sale, the partnership can be dissolved. This means that all dealings will be wound up, dissolution documents will be filed with the state, the final taxes will be paid and the business will be closed. Then, the remaining assets and liabilities will be divided between the partners. This option can be complicated, particularly if the business has significant assets or liabilities, including things like real estate and investments.
Ultimately, all of these solutions require a certain degree of cooperation between business partners to work, and that may not be feasible if you and your partner have had a significant breakdown in communications. In those situations, you may have to take legal action to force either a buyout or a dissolution of the partnership so that you can move forward.