Business Partnership Formation / Adding a Business Partner
Does your business need an investment in exchange for equity? Do you need someone with another set of skills? Adding a partner is much more complicated than it appears on its surface. We offer a unique 4-step process of creating a comprehensive Operating Agreement and Partnership Charter that helps resolve disputes before they kill the business.
Business Partnership Buyouts
Do you need legal guidance to buy your business partner out of the business? You may already have a buy-sell agreement in place. If not, together, we will lay out the terms of the buyout.
Business Partnership Divorces
Partnership disputes can damage your business permanently. We can guide you through the legalities of a dispute, and if necessary, help you through a business breakup.
How can I get started with a business partnership?
It can be a heavy burden for one person to take on 100% of the business, and a business partnership can certainly alleviate this burden by splitting up investments and responsibilities. But it’s important to make sure your partner should be someone you are willing to work with every day, someone who shares your vision and brings complementary skills to the table.
Click here for tips on how to choose the right, and avoid the wrong, business partner.
What are the benefits of adding a new business partner?
Some of the most common reasons business owners decide to add a new partner include:
- Securing additional capital
- Needing expertise to grow the business
- Lightening the load for the business owner
- Bringing family members or friends into building the company
- Creating a succession plan
Of course, this decision should be made carefully and with the appropriate protective business measures, including equity ownership (the new partner gaining ownership after meeting certain goals) or a buy-sell agreement. There are many things to discuss with your potential business partner.
What is a buy-sell agreement, and why do I need one for my business partnership?
A buy–sell agreement, or a buyout agreement, is a contract between co-owners of a business that addresses the situation if a co-owner is, for any reason, no longer a part of the business. Examples include when a co-owner:
- Wants out of the business
- Wants to sell his shares to someone else
- Wishes to retire
- Goes bankrupt
- Becomes disabled
- Gets divorced
- Dies
You can think of a buy-sell agreement as a “business pre-nup” between all the business partners or shareholders governing what should be done in such circumstances. These agreements are important because they force the business owners to talk and set guidelines for the process before it happens and to avoid expensive litigation if a dispute arises.
What is the process of removing a business partner?
In some situations, business partnerships do not work out. The partner may seem uncommitted to your business or is under-performing when compared to other partners and shareholders of the company.
The process for removing a partner should be outlined in your business documents and agreements from the get-go, but even in those situations, it’s helpful to have an attorney help you sort through all the complexities of the process.
Can I buy my business partner out of my business?
The complexity and cost of buying a business partner out of a business depends on whether or not the partners agree.
What do I do if I am having disputes within my business partnership?
Disputes are bound to arise in a business. These issues may occur due to any of the following circumstances:
- Partners are paid or treated unequally
- A partner starts or joins a company that competes with the partnership
- A partner leaves the partnership on bad terms
- A partner stops giving the partnership business their full effort
- A partner uses partnership assets for personal gain
- A partner makes important decisions without consulting the other partner(s)
Not surprisingly, sometimes the process of solving these disputes can feel as complicated and as messy as divorce proceedings, trying to maximize what each partner is owed in an amicable way and determining who should retain what, and what will happen to the business in the case of a split.
For this reason, it’s not always plausible for an attorney to represent both parties at the same time.
Disputes are bound to arise in a business. These issues may occur due to any of the following circumstances:
- Partners are paid or treated unequally
- A partner starts or joins a company that competes with the partnership
- A partner leaves the partnership on bad terms
- A partner stops giving the partnership business their full effort
- A partner uses partnership assets for personal gain
- A partner makes important decisions without consulting the other partner(s)
Not surprisingly, sometimes the process of solving these disputes can feel as complicated and as messy as divorce proceedings, trying to maximize what each partner is owed in an amicable way and determining who should retain what, and what will happen to the business in the case of a split.
For this reason, it’s not always plausible for an attorney to represent both parties at the same time.
How can an attorney help me through this process?
Ideally, you’ll never have to hire Spera Law Group or any other attorney to help you settle business partner disputes because you will have prepared everything on the front-end.
However, in the event that disputes arise, it’s important to fully understand the issue before confronting your business partner. An attorney can help you carefully review company documents, such as the shareholders agreement and partnership or LLC operating agreement.
Your attorney will also ensure that you have met all your legal duties and obligations before addressing the dispute with your partner. They will then be able to guide you through whatever type of mediation or litigation you choose to pursue.
Read more on our blog about Dissolving A Business Partnership
”“Outstanding legal service. Andrew Legrand and his team have been in our corner for years. They’re built for small business, and understand our needs like they're a part of our company. Highly recommended!”
Michael Rudiger
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When dealing with business partners, you’ll want to hire attorneys with established track records of resolving business disputes quickly and efficiently, who additionally understand the effects these changes will have on your business. At Spera Law Group, we’ve helped businesses of all types through these changes. Schedule your free initial consultation with us today so that we can get started on your case.
How we work with our clients:
- Providing predictable monthly fees
- Advising on specific legal issues OR through general consultation and guidance over time
- Eliminating the uncertainty of cost
- Systematically updating you on a regular basis
- Switching from legal issues reactions to legal problem prevention
