Unfortunately, all signs may indicate that business partners need a business divorce after trying to run a joint venture together. A “business divorce” refers to ending a business relationship. This could include dissolving the business, splitting up assets, selling the company, or other options. There are a few common signs that business partners could be headed towards a divorce, including disagreements about operations, different work styles, trust violations, or lack of engagement.
Disagreements About Running the Business
Having disagreements about running the business is a good sign that business partners might not be compatible. When you start a business together or join forces to run an existing business, you usually expect that you will work together with your partner to make the business a success. When disagreements arise, some partners are able to work through their differences. Other partners find that the disagreements are strong enough to make working together untenable.
If you are in this situation, you may be worried about losing money or control of the business if you separate. That is where lawyers experienced in business divorce issues can help. At Henke, Williams & Boll, we are familiar with handling business divorces when partners cannot agree about running their business. We understand that these disagreements could affect the divorce, and we work to preserve your rights when negotiating the terms of the business’s breakup.
Different Working Styles or Risk Tolerances
Similarly, business partners may need a divorce if they have very different working styles or risk tolerance levels. For example, one partner may wait until the last minute to finish important tasks or even complete them late. The other partner might want everything done early to avoid late fees and delays. Another example is having a higher risk tolerance level. One partner might want to take chances on investments or business opportunities that might not work out. This could lead to a lot of tension in a business relationship when the other partner doesn’t want to take risks, but both partners’ money is at stake.
If you are on the road to business divorce because of your working styles or risk tolerances, you have options. You may want to learn more about using mediation or arbitration as an alternative to filing a lawsuit. Some partners can work out their differences outside court. You should consult a business lawyer to learn more about how to proceed with a business divorce under your circumstances.
Violations of Trust
Unfortunately, violations of trust can lead to a business divorce. Partners have certain obligations to one another as they run a business. When one partner takes advantage of the other or acts unethically, you may need to end the relationship. Some examples of violations of trust could be:
- Making an important business decision without consulting the other partner
- Taking money from the business without approval
- Acting unethically in business dealings, putting the joint venture at risk
If you realize that your partner has violated your trust, you may need a business divorce. It is important to focus on what is best for your finances and the business’s future during the divorce. Letting personal feelings about the breach of trust get in the way could make it more difficult to break up. Ask your business lawyer for advice on handling violation of trust issues with your business.
Lack of Engagement in the Business
Finally, a fourth sign of an impending business divorce is one partner’s lack of engagement in the business. When a partner fails to take an interest in actively running the business, it can be hard on the other partner. Or one partner may have other obligations pulling him or her away from focusing on business success. This could be an indication that you need a business divorce. If one partner is less involved, closing up shop may not be the best choice for the business, in the long run. You have other options such as adding new, more involved partners, selling the business, or changing your ownership structure. The less engaged partner could become a so-called “silent investor” who does not run the day-to-day business operations. It is worth talking to a lawyer about how best to proceed with your relationship.
Let Us Help With Your Business Divorce
As experienced Houston business lawyers, we help our clients find the best solution possible. Our team works with business partners who need business divorces for various reasons. We give legal advice tailored to your unique situation, taking into consideration how your business runs. If you have questions about getting a business divorce and need to set up a consultation, call 713-940-4500 or use our convenient Contact Form.