A partnership can be a great structure for your business, as it can maximize your income, reduce your tax liabilities, and help you retain control of business decisions. Yet, many partners in a business end up facing disagreements at one point or another. Often, these disputes are resolved with nothing more than open and honest conversations. Others, though, can lead to long, drawn out litigation.
How can you avoid a partnership dispute?
One of the best ways to avoid a partnership dispute is to be proactive in heading off any disagreements on the front end of your business’s creation. For example, you might want to consider doing each of the following as you get your business up and running:
- Assess each partner’s values and goals so that you can have operational alignment as it pertains to growth strategies, work environment, work culture, and leadership styles.
- Come to consensus with your partners about how the worst situations will be handled, like sudden and devastating financial loss.
- Formulate a dispute resolution plan that focuses on discussing issues shortly after they arise so that they can be addressed before they become more problematic.
- Ensure that all aspects of your partnership agreement are commemorated in writing.
Of course, there’s only so much you can do on the front end to avoid these disputes. If you find yourself facing a difficult situation with one of your partners, you might want to consider entering mediation or using a buyout agreement. A freeze-out merger, while often leading to a lot of contention, may also be an effective strategy to protect your interests.
Find the solution that’s right for you
Although dealing with a partnership dispute can be incredibly stressful, there are options for working through it. You simply have to know what’s on the table and how to navigate the dispute in a way that protects you and your business. If you’d like to learn more about what that would look like under your particular set of circumstances, we encourage you to continue to research partnership disputes and the steps you can take.