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Is your business prepared to withstand a dispute between owners?

On Behalf of | May 26, 2022 | Business Litigation |

Disagreements often arise during the life of a business. You and your partners may not always see eye to eye on every single issue. When there are concerns, a sound plan of attack can help make a complicated situation much more simple, but only if the mechanisms to deal with such issues are already in place.

One of the most effective ways of resolving disputes among business owners is to draft a sound operating agreement. Taking time at the formation of the company to lay out a manner of dispute resolution can give all parties sound direction, which can help ensure that the business remains stable while matters are being addresses.

However, despite the benefits provided by such an agreement, many business owners fail to discuss these concerns at the time of formation. They overlook these critical details until it is too late. Do not let your company fall into that category. In this post, we discuss a few items to contemplate during the formation of your entity, so that all partners know what to expect going forward.

Looking at the big picture

Disputes among business partners often start out small but become much larger issues over time. A falling out between partnerships threatens ownership, control and, most critically, the survival of the company. In many circumstances, the parties may agree that things are simply not working out. Several different options may be considered at this time, including:

  • Buying out your partner
  • Selling your share of the company to your partner
  • Working to sell the company
  • Mediating or litigating your dispute

When parties are not getting along, the cost of doing business can go up. In other words, you may have to spend a lot of money to find a solution to a problem. This is especially the case if there is no set plan at the time of the disagreement. Partners may set extremely high prices for their share of the company or file a lawsuit in the hopes that they can force a person to resolve the matter at unfavorable terms.

No matter how close you are to your business partners, remember that this is a business arrangement. Things change over time. The more steps you can take to control what happens down the road, the more confident that you can be in the fact that your personal interests are protected no matter how deep-rooted the dispute is among business partners.