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Mediating the end of a business partnership

On Behalf of | Aug 9, 2022 | Alternative Dispute Resolutions

Business partnerships end for all kinds of reasons. Whether one person in a two-person partnership wants out in order to take advantage of other opportunities or a group of partners decide they want one partner out, it can be a complicated, unpleasant situation. That’s particularly true if the partnership agreement lacks some necessary detail or was confusingly written.

Mediation can be a good way to negotiate the end of a partnership. It’s typically less expensive and combative than litigation. It can help save professional and personal relationships.

In mediation, a third party guides the parties involved through the decisions they need to make and the matters they need to agree on to reach a settlement that is agreeable to everyone. Just as when mediation is used in divorce, the parties involved do the bulk of the work themselves. However, the mediator can help them come up with solutions they may not have considered and work through points where they’re having difficulty reaching a consensus.

What do you need to determine?

If you’re using mediation for any kind of change in partnership, you need to come prepared to address a number of questions. Here are just a few examples:

  • Why is the partnership being modified or dissolved?
  • Will the business continue after the partner in question leaves?
  • How will assets and liabilities be divided among the remaining partners?
  • What is the payout to the departing partner?

The mediator can make recommendations, but the partners need to reach a decision they agree to abide by. If they can’t, or if someone refuses to live up to the signed agreement, they’ll likely find themselves in the court battle.

If you believe that your partnership agreement dissolution or modification can be successfully mediated, or even if you’re just interested in finding out more about the process before you decide what to do, it’s wise to learn more about how business mediation works.