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Lessons Learned From a Business Partnership Breakdown

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This article has been submitted by Peter Lynn and Partners 

Hindsight is truly wonderful thing.

The clarity of knowing what you should have done can cause a frustration like no other.  Add in a few “I told you so” comments, a hefty financial bill and you can be sure you will not forget the lesson learned in a hurry.

For those who have been through a business breakup, especially where there isn’t an agreement in place, you will know only too well the need to have a written partnership or shareholder agreement, no matter how strong the relationship is to begin with.

Consider the following common disagreements between business partners:

  • One partner is taking a lot of holidays yet still wants an equal share of profits
  • There is a difference of opinion on which technology to invest in
  • A shareholder wants to lease expensive vehicles for himself and family members
  • A partner wants to give a high paid job to a family member
  • A partner wants to retire or leave the business

These are just a handful of scenarios that are often the catalyst to a disagreement that can sometimes end up in court if there are no clear guidelines in place on how to deal with specific situations.

Having a shareholder or partnership agreement offers security and clarity at the very time you need it, yet so many businesses are leaving themselves exposed by not having one in place.