MBT | McKay, Burton & Thurman, P.C. | Attorneys At Law

3 ways to resolve a serious dispute between business partners

On Behalf of | Mar 9, 2023 | Business Law

A business partnership is like any other relationship. One may start out strong and on a positive note before things slowly take a turn for the worse. One partner may stop putting in their full effort or may engage in misconduct that harms the business. There could also be a conflict of personalities that develops over time, just like a married couple might grow apart over the years.

Working together in close quarters for a long time can lead to interpersonal conflict that business partners may not be able to overcome. Regardless of whether the issue is misconduct, incompetence or personal matters, partners will need to take steps to resolve contentious issues or run the risk of their disputes harming the company. These are a few of the potential solutions that feuding business partners may benefit from considering as they attempt to move forward.

1. Attend mediation

Mediation sessions can be a great way to work out a solution in a situation where partners disagree about the right course of action. Mediation involves working with a third party who remains neutral and tries to help both sides of the situation come to a mutually agreeable solution.

Mediation is a confidential process, and it can help people preserve the relationship that they have by making cooperation easier. Especially if people hope to continue working together, mediation can be a wise choice.

2. Discuss a buyout

In a scenario where the issue involves a breach of trust or a breakdown of the partnership relationship, it may not be possible for both partners to stay at the company and continue operating it. A buyout conducted according to the terms of a partnership agreement will allow one partner to continue running the business, while the other takes their share of its value and pursues opportunities elsewhere.

3. Organizational dissolution

In scenarios where the relationship does not seem salvageable and neither party is willing nor able to buy out the other, simply dissolving the organization might be an option. Other times, partners might agree to sell the company to a third party so that neither has any obligations to the organization in the future.

It can be difficult to set aside personal feelings in order to focus on the economic impact of a business dispute, but that is exactly what partners should do for their own protection. Exploring possible ways of resolving a business partner dispute can benefit both partners and the organization(s) that they run together.