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How to Fire a Bad Business Partner

By Ephrat Livni, Esq. | Last updated on

You believe your business partner is not performing and that you would be better off without that person. What can you do? The answer depends on how your partnership is structured legally, or your deal, and what you can afford.

If money is no object for you and your partner is not intent on remaining in the business, you could buy them out. But life and business are rarely that simple. So, unless you planned for a partnership change in advance, here are three approaches to consider.

Three Approaches to Dissolution

1. Direct Negotiations: Talk to your partner about what is happening and ask what you can do to improve the situation. Perhaps you are not aware of all of the circumstances impacting performance. Maybe more communication can help you find common ground. But if things have gone too far for you and nothing will sway you from a decision to split, then use the negotiations to find out what it will take to get your partner to agree to dissolve your partnership.

2. Hire a Mediator: You have tried talking and you just cannot communicate. In that case, speak to your partner about seeing a professional mediator. Putting the problem before a neutral third-party may be just the trick. Sometimes negotiations break down because the parties already have a pattern or habit of interaction that is negative. Taking your own and your partner's personalities out of the equation may make it easier to reach a new agreement. Depending on how you structure the mediation, the third party can come to a conclusion that both parties must accept, or can simply facilitate discussion.

3. Filing a Lawsuit: If your partner is refusing to cooperate and does not want to acknowledge the need for a new agreement, then it might be time to take legal action. If there is no exit strategy built into the terms of your agreement, you may be in for a long and costly dispute. Think very carefully before you file suit.

Whatever You Choose

Whatever you do, speak to an attorney before you make any moves. A lawyer can go over your agreeements and clarify your rights and obligations. Even if you have an exit strategy built into your business, you should get help in handling the dissolution of partnership. Consult with a commercial lawyer.

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