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Joining, Leaving or Dissolving a Partnership

Partnerships often involve complex, sensitive and emotional relationships. Handling changes carefully, yet thoroughly, is often the key to a successful entrance to, departure from, or dissolution of, a partnership.

Joining, Leaving or Dissolving a Partnership

Partnerships are often considered “marriages” in the business world. And, while there are prenuptial agreements for marriages, there are similar documents for business partnerships. If your partner is another business, reselling your products or services, you need a good partnership agreement to define the bounds of the relationship, expectations, responsibilities and just as importantly, how to unwind the partnership if it’s not working for one of the parties.

Partnership agreements, bylaws and operating agreements are all tools to help define the partnership.

For partners in the same company, such as shareholders of a corporation or members of a limited liability company, the bylaws, operating agreement or partnership agreement (for partnerships or s-corporations) is absolutely critical. It defines the powers of the partners, expectations, whether and how a partner can leave or a new partner join. These documents help define what happens in times of crises, such as when a partner dies or becomes incapacitated or the business needs to declare bankruptcy.

Lawyers will be involved either in the beginning or the end, which do you prefer?

When talking about a partnership, I often say the following: When do you want a lawyer involved, in the beginning when everyone is getting along great, or at the end when there is potential conflict, ill-will and hard feelings? L4SB is equally adept at both ends, but we feel strongly that hammering out a partnership in the beginning or when joining is the most cost-effective for our clients. Doing so helps ensure that the difficult issues are discussed — and agreed to — while the parties are getting along.

L4SB can help you form, join, leave or dissolve a partnership with business savvy and sensitivity.

See other pages: Buying or Selling a Business