There are many benefits that you can enjoy from forming a partnership in order to start and manage your business. Working with a partner brings a unique set of challenges though, own of the biggest being when there is a conflict in ideas of where to go with the business and when it is time to make changes. In the best-case scenario, both partners will agree about decisions involving growth and direction for the business, including when it is time to sell. But if both partners don’t agree, or have different ideas on the process they want to follow, then this is obviously a very big problem. It is so big in fact that it poses a very big risk to your chances of getting the best price for your business or being able to successfully sell it at all!
Related: How to Sell Your Business to Your Business Partner
The Value of Buy-Sell Agreements
Fortunately, not every disagreement between co-owners turn into an issue that ruins a sale. In the best-case scenario, in the early stage of the business partnership, you both would have already discussed basic plans for what to do if the time came where one or both of you wanted to sell the business. Many partners work up documents to outline steps that will be taken when certain issues or problems are faced. This is done in order to give them a framework to follow when a heated argument arises and provides a sort of middle unbiased ground that they both agreed upon before emotions got so high. These are often known as buy-sell agreements. Often these documents outline the rules both partners agree to adhere to if one owner wants to leave the business. There are many different scenarios that can be discussed and the documents can outline a multitude of options. Ultimately, the main point of the buy-sell agreement is to outline how the partners will proceed when the question of selling arises.
If your co-owned business has such a buy-sell or other agreement in place, you will find it offers a way to get back to a frame of mind that is ruled by logic and understanding rather than one rules by emotions and personal feelings. But even if you and your partner did not set up or sign a buy-sell or other similar agreement, and the sale of your business is still a possibility rather than a necessity at this point, you can still work towards developing a plan that you both can agree upon. You can approach your co-owners with the sensible suggestion and keep an open mind that allows them to offer ideas and thoughts and suggestions as well. When both sides are willing to listen to each other and even compromise a little it is easier to overlook their own inflated ideas and options and reach a common ground. It is always easier to do this the farther out the sale is so the sooner an agreement can be reached the easier the sale will be when it actually occurs.
Mediation For Disputes With Co-Owners
If there is no buy-sell agreement in place and discussions have been going around and around with little or not resolution in sight then it may be time to seek help from outside the company. This can be especially true if the reason you are selling in the first place is because there are underlying differences among the owners that make working together next to impossible. When partners and owners are always in disagreement and always fighting and at each other's throats it is hard for any business to be successful so selling to someone who can properly manage and control the business may be the best thing for everyone in the long run.
It is important that everyone find a way to lay aside their animosities and work cooperatively during the sales process. Working with a mediator can be away to help everyone take a set away from their personal thoughts and feelings and emotions and focus on the business from a more unbiased vantage point. A mediator can help the involved parties see things from a point of view that is outside the business, outside the struggles, and outside the animosity that everyone is feeling at this moment. Mediators can be brought in from the outside to assist in the process of reaching a resolution. Sometimes there is one party involved in the management of the business that is not as involved with the struggle and conflict and they can act as a more unbiased voice. You can also try to self-mediate with you and your partner if you feel you both can successfully put aside personal feelings and look at what is best from a logical and business standpoint.
Legal Course for Business Sales
If you and your partner are at an impasse when it comes to whether or not to sell your business there are options available that are a bit more definitive and forceful. These usually are not tapped into until other options have been used and legal course is the only real option to try and reach a resolution to the conflict.
Try to Avoid Suing Your Partner
It is always best to avoid a lawsuit if at all possible because in most cases, suing your business partner is not something you likely want to do and it will be a long and involved process. When you file a lawsuit against a business partner, you are making a disagreement you are having even more adversarial. It is best to find some other option for reaching an agreeable solution but this unfortunately is not always the case. If you go this route, it is important to work with a skilled and experienced business litigation lawyer and let them help you navigate the process.
The Option for Involuntary Dissolution
When the resources and assets of a business are distributed equally between two business partners and those partners are unable to come to an agreement about the sale, the party that wants to sell may seek legal recourse. During the court proceedings, if the court agrees that no agreement can be reached the judge could decide to allow for what is known as an involuntary dissolution of the business. If this occurs, the company ceases to exist and all assets are liquidated and distributed evenly between the two partners.
Negotiation is Always Best
Keeping the business up and running like normal should be the primary concern at all times. Therefore, the best thing you can do is to have an honest discussion with your partner about what they are feeling and thinking and what their reasoning is for wanting out. Your partner might not want to sell for the reason you think and you may be able to work something out quite easily if you know what it really going on. If this fails legal action may be the only solution so ever effort should be made to reach an agreement before that happens.
Final Thoughts
There are many challenges that come from forming and maintaining a partnership - one of the biggest and most potentially devastating can be a difference in option about whether or not to sell the business. When partners and co-owners disagree on this point it opens the door for a world of trouble. Preventing major issues is easy if both partners have the foresight to work up a buy-sell agreement when they first partner up and start the business. If an agreement is trying to be reaches when a potential sale is looming or one partner wants out then a mediator might be needed to help both parties reach an agreement. There are ways to reach an agreement so the important thing is to keep talking and working towards a solution that all involved parties can agree upon!
