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Understanding why your partnership may be in trouble

Posted by William J. Cook | Jul 24, 2018 | 0 Comments

When you and your business partner started out, you may have been in complete harmony with one another. You seemed to have similar ideas at the same time and perhaps even finished each other's sentences. Even when your suggestions were dissimilar, you were both focused on taking the business in the same direction, and you complemented each other's strengths and weaknesses.

Where did those days go? All of the advantages of taking on a partner – including sharing the risks and expenses – have now become fodder for the deepest division between you. The trust is broken, and the reputation and future of the business is on the line. As your partnership dispute reaches the point where litigation seems to be the only way to resolve it, you may be wondering what went wrong in the first place. It may help you to understand some of the common follies of partnerships.

Common reasons for partnership failure

Some surveys show that only about 30 percent of partnerships survive. One factor that contributes to the breakdown of many partnerships is the fact that businesses go through natural ebbs and flows of success. If your partner has sacrificed a solid job with a steady income, it may be difficult for him or her to muster the patience it often takes to get through the rough patches. Starting a new business is a risk, and some partners aren't prepared for the long haul.

Other factors that may place a partnership at risk of failure and even legal conflict include these:

  • Partnering with a spouse or friend is a risk if you are unable to keep your business life separate from personal life.
  • If one partner contributes more startup funds than the other or one is more committed to the business, conflicts may quickly arise.
  • Your partnership may fail if you and your partner have not discussed your goals and values at length.
  • While you want a partner who will complement your skills, choosing someone whose personality conflicts with yours can open the way for many disputes and disappointed expectations.

You may be able to resolve some of the above issues with communication or mediation. However, if you can't trust your partner, your Florida business may be doomed. Ethical or financial issues in the past may be predictors of future behavior.

You share liability with your partner, and if he or she is not trustworthy, you could have more than your business at stake. If you find yourself in a conflict with your partner, you may wish to seek immediate legal counsel to shield yourself from potential liability and ensure you protect your rights and interests.

About the Author

William J. Cook

William J. Cook represents clients in matters involving business litigation and commercial and employment disputes, securities litigation, business transactions and counseling, and insurance. Mr. Cook's peers have awarded him with the highest possible rating of AV-Preeminent* by Martindale-Hubbell, which speak...


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