People sometimes start a company without realizing what may happen if their business takes off. Others may buy into something with unrealistic or ultimately unrewarded expectations.
These situations may lead to a number of issues, but among the most common is that partners may decide to leave the company. It is a natural and predictable event in the timeline of many businesses, but each situation poses unique challenges.
Disparate points of view
One of the main issues is that leaving a successful business is a personal decision. Some may want to withdraw their increased capital investment and pursue alternative opportunities. Others may simply not want to operate in a stressful, startup environment. Whatever the reason, it is often the case that the partner who stays has a much different point of view than the partner who decides to leave. Sometimes, reconciliation requires civil procedure or professional mediation.
Noncompete agreement conflicts
A common legal situation is that the partner who leaves may want to continue on in the same career or industry. However, this could be an issue if he or she signed a noncompete agreement. Determining exactly what, where and how the new business takes place would define whether the ex-partner was violating the agreement.
Buyout amount disagreements
Mediation is important when determining a buyout amount. This is especially true if one partner or the other was responsible for most of the financial side of the business. Two investigations, one for each side, could provide the clarity and fairness necessary for a lasting, conflict-free buyout.
Unrealistic dissolution expectations
Another common issue that is related to this subject involves planned business dissolution. Some people form limited-duration companies with a certain expectation of return on their time and capital investment. If the business dissolves with a loss, or if the gains are disproportionate in some way, partners may view this as grounds for a lawsuit.
Leaving a business can sometimes be easy. With the right legal steps, even a complicated exit could turn out to be a win-win situation for everybody involved.