Building a successful business can be one of life’s most satisfying challenges, and doing it with a partner can help divide the load and make it even more pleasant. But when differences arise that signal it’s time to part company, you need to know how to do it correctly to make a fresh start and not create a new enemy. When it’s time for a business separation in Tennessee, be sure to protect yourself and your interests.
Review Your Partnership Agreement
Your business partnership likely has a legal agreement that may include provisions for when one partner leaves the company. Review this to be sure you follow any guidelines or stipulations it includes. It’s always a good idea to have an experienced Memphis Business Separation Attorney review the agreement with you and help you understand its provisions and your best course of action. There may be other aspects of the agreement that need discussion, including:
- Non-compete agreements
- Non-disclosure agreements
- Asset distribution agreements
- Proprietary property agreements
It is always wise to be armed with a working knowledge of your partnership agreement in the event the business separation turns sour. Even if your business partner breaches one or more provisions in your agreement, your strategic position and leverage in any forthcoming negotiations are only strengthened when you abide by the agreement.
Review Applicable State Laws
Businesses are governed by numerous federal and state laws that seek to regulate commerce, encourage competition, prevent fraud and more. Some of these laws may impact how you split from your business partner, particularly if a business separation means a dissolution of the company. Depending on your circumstances, you may need to file a notice of business dissolution with the state, or file amended business documents that reflect a change in leadership/ownership.
There can also be other legal implications in a business separation, such as taxes. Dissolving a partnership and dividing the assets can trigger a possible capital gains tax for each partner. Other laws may govern how assets can be divided or invested when a partnership ends. Consult a TN Business Attorney in Jackson for guidance.
Determine an Exit Strategy
You should plan ahead for how you want to end the partnership and your own exit from the company. This should include how you will share your intentions with your other partner(s), where you will go from here:
- Retirement
- Semi-retirement and consulting
- Joining another business venture
- Starting another business
You should also develop any formal proposals you wish to make for ending the business relationship and acquiring your fair share of the business’ assets. This can include new investments or changes to your personal estate plan. Consulting with a reputable attorney in these areas can offer significant benefits to make sure your interests are protected.
Meet With Your Business Partner
This meeting should be honest and forthright, but without rancor. Regardless of the reasons for ending the business relationship, it’s business, not personal. Explain your reasons for desiring a split without placing blame or making accusations. Discuss the ramifications of your business agreement and how it applies to a business separation. Your business partner may need to consult an attorney about their interests and handling the company after your departure. Allow them suitable time to process everything and protect their own interests, and those of the company.
Make a Decisive Break
Don’t drag out the particulars of the business separation. When you decide to leave, handle it the right way and leave. Work with your business partner as much as possible to set a firm date that works for both of you and the company. Leave and don’t look back.
Partner with a Competent Business Separation Attorney
The Crone Law Firm in Tennessee has competent and experienced business separation attorneys available when it’s time to split from your business partner. Companies grow and change and the circumstances can also change, leading to a new and better pathway for you. There is no shame or stigma from realizing it’s time to end a business partnership and move on – it happens more frequently than you may realize.
Contact a Nashville Business Separation Attorney today if you believe it’s time to split from your business partner. It is imperative that you make the break cleanly, legally and ethically, doing no harm to yourself, the company or your interests. We know how to help and provide seasoned guidance through every step of a business separation in Tennessee.