Dissolving a business partnership is a bit like filing for divorce. You will try to figure out the fairest way to split the property you share with your partner based on your individual contributions to the company.
Also, you may have to involve the courts if the two of you don’t agree on terms, and there’s a good chance that your business partner may take your decision personally. Especially if you would like to maintain an amicable relationship afterward, you need to think through how you approach the dissolution of your partnership thoroughly.
Review the financials before you take any big steps
You need to know the state of your company and what assets and debts the two of you will have to split to make a good pitch to your partner. Looking at your company’s revenue and listing both assets and liabilities can help you play some approximate valuation on the company.
This process can also help you earmark certain assets and debts as something that one or the other of you should retain in the dissolution process. This will also be a good point to review your partnership agreement to see if there are specific terms you have to meet during the dissolution process.
Craft an offer that is valuable for both of you
It is common for people to have an immediate, negative reaction to the news that their business partner wants to end the relationship or shut down the business. You need to have a strategy when going into this difficult discussion.
Do you want to buy out your partner and keep the company operational? Do you want to dissolve the business and splits the assets? Do you hope to sell the company?
Having a plan and an idea of what it might mean for each of you can help you paint a positive picture about the future both of you could enjoy after ending the partnership.
Prepare to negotiate with your partner
Your partner may have expectations or wishes that you don’t know about, so they may counter any offer you make, however generous it seems. Give yourself some leeway in the offer that you make so that negotiation won’t put you at a disadvantage. Recognize that it may take weeks for you to reach an agreement that will allow you to preserve the relationship even after the partnership.
When making any big business moves, including ending a partnership, it’s important to do so only after careful consideration so that you protect yourself from unnecessary losses and risks.