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Dissolve a partnership without ruining a company

Starting a business on your own is incredibly difficult. It makes sense that you would recruit a friend or associate to be a business partner – someone who will support you and wants to see your business succeed.

However, partnerships evolve as your business grows. There are circumstances where it’s time to dissolve a partnership, especially before it damages the overall company.

Signs that it’s time to break up

Dissolving a business partnership is like breaking up with a significant other, and there tend to be warning signs when it’s time to end the relationship:

  1. Constantly disagreement – Different perspectives in a partnership offer new ways to look at the same business. However, if you and your partner continuously disagree on the direction of the company, it won’t help your business operations.
  2. They do not carry their weight – In the initial contract, you probably designated specific responsibilities to each partner. But as the business grows, you notice your partner won’t do their fair share of the work.
  3. You have entirely different styles – Every leader has a specific style they adopt in the workplace. However, some leadership styles are incompatible with one another. It may cause unnecessary tension between you and your partner, possibly other employees.

How to address the break up in a mature way

You notice the red flags, but how do you address ending the partnership without destroying the company’s progress? Luckily, there are a few ways where you and your partner can make a clean split.

First, review your partnership contract and see what your options are. In some cases, you already developed an exit strategy in the matter either partner wants to leave. All you need to do is follow the guideline that the contract already lays out.

If your contract did not discuss that possibility, you need to examine Michigan’s laws around dissolving a partnership. Afterward, you need to set expectations for the transition process. It’s not fair for you to kick your partner to the curb if they acted respectfully throughout their employment.

Consider buying out your partner’s shares or adopting a new role for them if you want to continue their presence in the company. It depends on your current business partner and if you're going to maintain a good relationship after the dissolution.

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