There are a variety of reasons why you may want to dissolve a business partnership. Perhaps you created the partnership to achieve specific business goals, and those goals have been met. Or one partner has decided to retire or change their mind about the partnership.
Here are some of the reasons why you may want to dissolve a business partnership.
Professional misconduct
Every business partnership is governed by a partnership agreement. If one or more partners violate the terms of the partnership and, thus, engage in unlawful or unethical activity, then the aggrieved parties may petition the dissolution of the partnership on grounds of professional misconduct. Besides dissolving the partnership, the partners in question may also be held liable for any damages occasioned by their actions.
Bankruptcy and a bad economy
Basically, people get into business (and partnership) to make profits. If the business is hit hard by a tough economy, then the partners may resolve to close shop, and, thus, end the partnership. This will protect partners from racking up debt to keep the business afloat.
Business conflicts
It is not uncommon for partners to disagree over certain business decisions. While most conflicts are easily resolved through arbitration, there are instances when the partners may fail to resolve their differences. In this case, partnership dissolution may be the only way out.
Poor management
A lot of work goes into running a business successfully. Unfortunately, not everyone is a great manager. Bad business decisions (especially with respect to the company’s vision and finances) can spell doom for the business. This might prompt the partners to dissolve the partnership.
Dissolving a business partnership can be a huge challenge, especially if the decision is occasioned by disagreements. Find out how you can safeguard your rights and interests while dissolving a business partnership.