Breaking up a business partnership is difficult, especially when friendships are involved. But sometimes a company needs to fold, and too often the lead-up stress pushes personal bonds to a breaking point.
Fortunately, there are ways to dissolve a business partnership while preserving the personal relationship. It may take a lot of straightforward communication and empathy, but it can be done. Here are five key insights drawn from common patterns I’ve seen across friendships that have successfully weathered the storm of a business partnership breakup.
1. End the Business Partnership Before It's Too Late
It's unlikely that the desire to close a business comes overnight. It tends to build over time, with small signs turning into red flags. Left unchecked, these warnings can reach a boiling point, turning the best of relationships into the worst. To help ensure an amicable breakup, it’s important to mutually spot the signs of a failing business partnership before it reaches a toxic breaking point.
One of the more noticeable signs is when one partner's work habits change. If they suddenly start neglecting duties or stop giving the business their all, it could indicate that something is amiss. Few things can mar a business partnership quicker than one person shouldering all the work while the other is slacking off yet still reaping the benefits of the company.
If preserving the business is the goal, try to compassionately ask your partner what’s going on – maybe they’ve been facing some difficulties in their personal life and need a vacation, or a life event has changed their course. But if the business is on its way out, and you ignore confronting mismatched responsibilities, pent up resentment can add undue tension when it’s time to eventually end the partnership and dissolve the business.
Another tell-tale sign the business is heading south is if partners find themselves in heated arguments about the direction of the organization. While healthy debates can cultivate better business outcomes, unresolved conflicts can make it much harder to sell a business due to perceived instability and a lack of unified vision. If it’s clear you can’t agree how to run the business, try to nip the problem in the bud. Rather than letting things fester, try to get out before the going gets tough, celebrate what you’ve accomplished together, and look to the future.
If you and your partner truly care about maintaining a friendship once the business ends, all parties must be willing to reasonably figure out how to walk away.
2. Review Your Business Partnership Agreement Together
If it’s time to end the business partnership, it’s important that all partners revisit the partnership agreement. This agreement outlines the rights and responsibilities of each partner and what each partner is entitled to. Ideally, the partnership agreement may also include a roadmap for how to fairly dissolve the business and create a drama-free exit strategy that limits negative financial repercussions. For example, the agreement should lay out how profits should be divided, how assets should be sold, and how debts should be paid off. At a minimum, adhering to the predetermined agreement can prevent legal disputes. At best, sticking to it can help partners maintain respect for each other and preserve their relationships.
If the business didn’t create a dissolution procedure, consider working together to get on the same page and end the partnership. If one partner starts to make moves without the other, a rift can begin to form.
3. Keep the Dialogue Going Even After the Business Partnership Ends
When a relationship turns contemptuous – be it a business partnership or friendship – it can often be the result of a communication breakdown.
If you want to salvage the friendship after the business dissolves, try to keep the dialogue going. If resentment, anger, and pent-up frustrations have tarnished the bond, it can be hard to hear what the other person is saying. But dialogue includes listening as well as talking. Taking the time and care to truly listen to each other and openly communicate through the entire business dissolution process can go a long way toward preserving your friendship.
To avoid miscommunication, try to be clear about what you want from the breakup process. If staying friends is the most important goal, communicate that. If making the most money off the business is the objective, communicate that as well. But remember that eschewing fairness for profits likely won’t help salvage a friendship.
4. Be Reasonable and Willing to Compromise With Your Business Partner
If you and your partner truly care about maintaining a friendship once the business ends, all parties should be willing to reasonably figure out how to walk away. Without that and the willingness to compromise, you most likely can say goodbye to the relationship and hello to a contentious – and perhaps ugly – breakup.
Amicably ending a business partnership may require giving up a little more than you wanted, but the goal is to ultimately let go, mindfully move on, and keep the friendship intact. If the process is long and drawn out with quibbles over every detail, or rushed to get it over with (at the expense of potential oversights), it can be hard to maintain the friendship.
5. Get a Third Party to Help Devise an Impartial Dissolution Strategy
Sometimes even the most easygoing negotiations require a third party. For partners that want to maintain their friendship after the business ends, getting the advice of an independent expert can go a long way in achieving that goal. A person without a stake in the business can provide objective advice, which can help limit arguments and bitterness. And calling in help at the first signs of a souring partnership can help prevent irreparable damage in the future.
When looking for a third party, consider choosing someone both partners can trust. Consider contacting a qualified business mediator, business coach, accountant, or even a lawyer that all will work for all partners. Try to stay away from retaining a lawyer for your own personal gain. As soon as you do that, your partner may take it as a sign that your relationship is over.
The Bottom Line
Just like a failed marriage can take time to dissolve, the same can be said about a business partnership. Try not to ignore tension. Ceaseless bickering or disputes can torpedo your relationship as friends and as business partners. To help facilitate a smooth break, try to pay attention to signs that the business can’t go on and aim to end things before resentment builds. Try to shelve any hurt feelings, impartially work to dissolve the partnership, keep an open dialogue going, and don’t be afraid to get a third party involved.
A version of this article was originally published on April 03, 2018.
Photo: Getty Images
