When Businesses Partners Divorce
Sometimes events and the planets don’t exactly align in favor of business decisions, requiring business partners to call an end to a merger or partnership. For instance, General Electric recently considered cutting loose of their majority stakeholdings in Denver oilfield services corporation Baker Hughes. That hasty divorce, if completed, would have damaged both GE and Baker Hughes’ reputations. GE has been tarnished by decades of bad business decisions that have resulted in lower than expected dividends to investors, mass layoffs, and selling off old and struggling business units. Baker Hughes for its part started seeing its shares begin to take a nosedive. Luckily, GE did an about face and saved their business marriage to Baker Hughes.1
Not all business relationships have as happy an ending or make-up. Whether you’re the founder of a large LLC, a minor shareholder, and/or a managing partner within the company, you’re sure to find that there’s always going to be some concern about the efficacy of certain business dealings by your business partners. A lot of times, it’s family or a long-time friend that becomes a business partners. Or, the partner could start out seeming like a cordial and completely likeable and professional person. But, after some time has passed, there may come a day when a line gets drawn in the sand, so to speak, and you are completely on opposite sides of a very important business decision. Or, you can no longer see eye-to-eye as partners. What then? Well, let’s explore the options, shall we.
Offboarding a Business Partner or Yourself
The business divorce has become common terminology in today’s lexicon to describe how two or more business partners can no longer function and work together, and one or more partner is looking for a way out or a way to force another partner out. Here are some of the most common reasons business partners come to a business splitting cross roads:
- An aging partner refuses to retire
- Conflicts about the general direction of a business
- Accusations of embezzlement or claims that one partners is paying themselves more
- Allegedly lying to shareholders or keeping shareholders in the dark about business transactions
- Removing a shareholder or employee without the other partner’s permission or knowledge
- A perceived hostile takeover
Obviously, if a business partnership is falling apart, here are some of the important steps you should take to protect yourself:
- Make accurate, dated, and detailed notes about the situation and capture it in journal form. This information will serve as the basis for an internal investigation. A thorough review of business transactions, records, and financials should also be conducted.
- If you find any signs of impropriety during your investigation, then it is best to immediate contact a Greenwood Village business lawyer. This legal advocate can help you take the necessary steps to resolve the conflict to a mutually beneficial outcome.
- You will also want to locate and review your business or corporation’s governing documents, such as articles of incorporation, shareholder’s agreements, non-disclosure agreements, bylaws, etc.
- Chances are you’ve probably formed a tight relationship with your partner, or they may in fact be a relative, but either way a business divorce can take a toll on your mentally, physically, and emotionally. This may require seeking additional counseling from a professional, who can listen to the details of your separation and help you objectively review your options to make the best life choices going forward.
After going over all the facts and evidence of the business conflict, your Greenwood Village business attorney can help you make the best business decision to move forward. Here are some of the common outcomes after a thorough investigation has been conducted:
- Attempt to make amends with the business partner, if it is found that the relationship is worth salvaging.
- Begin mediations and negotiations between business attorneys.
- Seek a majority decision with stake and shareholders for the removal of a business partner.
- Seek a fair retirement package for your own departure.
- Plan for bankruptcy proceedings or dissolve the business and liquidate the business assets.
- Prepare for a protracted court battle
Contact a Greenwood Village Business Lawyer at Underhill Law, P.C.
If your business partner is acting in bad faith or you find that you can no longer functions as a business partnership, contact a Greenwood Village Business Lawyer at Underhill Law, P.C. as soon as possible. Quick action will help us prepare the best case possible, and provide you the with support you need during a difficult time.
To set up a scheduled appointment, call us today at 303-747-6817, or email us using the contact form on this page.
1“GE No Longer Wants a Hasty Divorce from Baker Hughes” published in CNN Money, Feb. 2018.