The Friendly Business Divorce

Whatever you want to call it - a business dissolution, breakup, or divorce - it’s always better for everyone if it’s amicable. That's right, a friendly business divorce is always the best option.

Even if amicable, there are negotiations and legal requirements to end the business relationship between partners or to dissolve a privately-held entity. 

There are plenty of situations where a business divorce can get ugly, but there are also times when the change is welcomed and friendly.

A few reasons why a business may enter into a friendly dissolution or divorce are:

• A partner wants to retire or falls ill
• One is engaged in criminal activity
• Some sort of liability requires the business owners to stop doing business.

When cooler heads prevail, amicable business divorces can be planned. If you and your business partner(s) are considering a divorce, here is a list of things to consider from the American Bar Association:

1. Is there a simple and efficient way to exit the joint venture?
2. Will the business divorce involve splitting up the company’s assets (finances and property)?
3. Make a list of the business's assets - from vehicles, real estate, and electronics to office furniture and supplies. 
4. Does the business own any intellectual property, and is it subject to licensing agreements?
5. What are the business's liabilities (agreements that must be satisfied or assets that are collateral for loans or lines of credit)?
6. Even if the business divorce is friendly, consider how your relationship with your soon-to-be former business partner will look in the future. 
7. Understand your rights when your company is dissolved. These rights can be determined by reviewing the company’s governance documents. 

Of course, even the most amicable business divorces can turn messy during the negotiation process - and that is why having a plan and understanding of your rights before emotions and tensions rise is important. So, if you are considering a friendly business divorce or even a nasty fight, give us a call.