Don’t Part Ways With Your Business Partner Until You Read This
Starting a new business is always exciting, but unfortunately, partners may eventually discover they aren’t a good fit for each other. The needs of the company may change, or you could simply find your partner isn’t suited to the job. Whether a partner is bringing negative press to your brand, mishandling funds, or just simply isn’t pulling their weight around the office, you’ve got options for how to remove them from the picture.
What Should I Know Before Firing a Partner?
When two partners can’t agree on a specific direction for the business, or one isn’t utilizing assets and money properly, it may be time to part ways in the interest of the company. In these unfortunate cases, the best path forward is to have already planned ahead and prepared for this possibility before it occurs.
It’s crucial to work with an experienced business startup attorney from the beginning so that there are agreements in place if the business needs to continue without one of the original partners. In particular, you should have a:
- General exit strategy in the event that both partners eventually want out of the business.
- Outline of each partner’s responsibilities and what should be done in the event of a dispute between partners. This should also include details on what offenses could cause termination and how the firing of a partner should proceed when necessary.
- Written buyout agreement in case one partner wants to be rid of the other down the line, which should be agreed to and signed by all parties.
It’s important to go over the specifics of these agreements with your attorney as soon as possible if you are thinking of making a major change to the partnership. A legal professional can help you avoid any potential missteps when booting out a partner who is no longer working in the company’s best interest.
How Do I Fire a Business Partner in Louisiana?
If you don’t have those crucial agreements already in writing, then what to do next will depend on how your LLC, partnership, or corporation was first set up. In some cases, the issue may be solved through a monetary payout, but there is potential for litigation if the partner doesn’t want to leave. Your main options for dissolving a business partnership and moving forward alone include:
- Buying out the partner. If you already have specific buy-sell terms in writing, then this process is relatively simple, although it can be costly. If you didn’t create a buyout clause, you will likely need help appraising the business to determine a fair price for your partner’s stake, if the partner is even willing to leave voluntarily in the first place.
- Dissolve the business. While this is probably the least attractive option, you can simply end the business altogether and start something new without the offending partner.
- Restructure the business. In some situations, your partner might still be a useful resource for the company so long as they are placed in a different role. An attorney can help you change the structure of your company, so you have a larger stake and more responsibility over areas that cause disputes with the partner.
- File a lawsuit with the help of an attorney against the negligent partner for breach of contract, breach of fiduciary duty, or conflict of interest.
That final option requires a skilled attorney with experience in Louisiana business litigation to be successful. Your lawyer will likely need to investigate the circumstances of the partnership and gather a variety of different types of evidence. To prove negligence in court, you and your legal counsel will have to show the partner has specifically breached their duties in violation of state or federal business law.
No matter which route you end up taking, the most important step is to talk to an attorney before attempting to buy out or fire your partner. Having all your ducks in a row ahead of time is important to avoid situations where a disgruntled partner may have the opportunity to cause harm to the business once they realize they aren’t wanted.
What Should I Do Next if I Want to Ditch a Business Partner?
Are you looking to protect your business from a negligent partner while ensuring your legal rights and financial stake in the company are secured? You need to speak with a business litigation attorney today. Get in touch with the trial-savvy team at Scott Vicknair for a consultation by using our contact form here or call directly at 504-500-1111.