Professional Partnership Problems – Leaving a Partnership
1st October, 2014
When you start up a new business, whether it’s with a family member, your spouse, a friend or colleague, the one thing that’s certain is that at some point someone will want to leave, or will be in a position where they have to leave (death, illness, dispute, change of personal circumstances all affect partnership businesses).
Exiting a partnership is often compared to divorce. However with expert help it should not be that painful!
Every partnership is different but we can see common themes including:
• Family disputes adversely affecting the business;
• The ending of a marriage or relationship leading to problems regarding the running the business;
• Loss of trust between the partners for some reason (money, lack of equal effort, changes in their personal lives);
• The evolution of the business changing the skills and personnel required to succeed. Start up skills, for example, are distinct from long term operational skills;
• Financial disputes – money is at the root of many of the problems we help resolve;
• “Partners” in companies – a partner is a specific legal term and does not apply in a company but we talk every day to those who think they are partners but are not. Do not panic – we guide companies, shareholders and directors on implementing exits as well.
All of these common issues can be resolved in a variety of ways. We usually advise our clients to consider:
• Negotiated retirement of an individual partner from the partnership (retirement being the legal term for leaving the business rather than becoming a pensioner);
• Force retirement (if the Partnership Agreement permits this);
• Mediation – an agreed outcome and departure terms reached by negation using the help of a independent third party;
• Arbitration – a decision imposed by an independent person charged with settling the dispute privately under the rules of arbitration;
• Litigation – using the Courts to achieve legal redress.
At Aaron & Partners LLP we have a niche team of solicitors advising solicitors, doctors, dentists, accountants and general partnerships (typically, transport, trading or farming businesses). Our specialist website can be found here: www.aaronspartnershiplaw.co.uk
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