Few people go into a business relationship thinking about when the partnership will fail. Partnership agreements can help ensure that the business does not fail (at least not due to internal fighting) as well as set a path towards amicable separation should disputes arise.
Of course, not all business relationships end with litigation or acrimoniously. Many partnerships have only minor disputes along the way and enjoy long lasting and fruitful relationships. Business partnerships require the same dedication, trust and respect as any other kind of relationship. For the owners to work together amicably, they need to have similar goals, values and visions. Having skill sets that are complimentary to each other can help establish a strong foundation for your business and can avoid the old saying of ‘there are too many cooks in the kitchen’.
Business partnership agreements are a formal working arrangement that are memorialized in writing and signed by the owners. For a corporation, this would be a shareholder agreement or bylaws. Limited liability companies have operating agreements. And partnerships have partnership agreements. These contracts, if done properly, provide clear expectations of how decisions will be made, which owner will be doing what, and, if a dispute arises, how to effectuate a buy-out without (hopefully) protracted litigation.
Owning a business can be challenging. Taking the time to speak with an experienced business law attorney to discuss legal protections, agreements, and expectations is well worth the time. Too often we have seen family or friends start a business together, fail to put their expectations in a contract, have their relationship deteriorate, and then end up in an emotionally and financially draining litigation. Forming a team (lawyer, banker, and accountant) at the birth of the business is invaluable. Having organized businesses in Minnesota, Wisconsin, Iowa and Arizona, we are ready to be your partner in your exciting new venture.
The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney. All information contained in links are the property of the linked site.