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Strategies to settle a business partner dispute

| Sep 26, 2017 | blog

Going into business with a partner is similar to any other type of long-term relationship. You are going to have your ups and downs. There will be matters that you do not agree on, such as a strategy for expanding the company or perhaps the hiring of a new manager. Regardless of the reason for the dispute, it does not take much for one to spiral out of control.

If you have found yourself in a dispute with your partner, it could lead to the dissolution of your Dallas area company if you do not handle it properly. While your partnership or operating agreement should lay out the procedures you must follow if you cannot come to agreement on a business matter, the following dispute resolution strategies may be helpful.

Open communication channels

Communication is a key component of operating a successful business. You have to communicate effectively with your investors, lenders, employees and even your business partner. Before taking any other action, you should take the time to sit down with your partner and try to negotiate a solution that the both of you can live with. If you cannot reach a compromise, it might be time to move on to a more structured method.

Bring in a mediator

Mediation is a great tool for dispute resolution. Typically, the process involves bringing in an independent, neutral, third party to oversee the process. You and your partner will sit down with a mediator who will guide you toward a compromise.

Refer to the organizational documents

When you and you partner first formed the company, you more than likely created and signed some sort of organizational documents, such as a partnership or management agreement. This agreement should have guidelines to follow if a partner dispute arises that you cannot solve on your own. It might require that the first step you take is to attend mediation sessions. In addition, it might grant one partner the right to buy the other out if a resolution is unreachable. In general, there should be procedures to follow to handle the dispute without dissolving the business.

Go to court

If your partnership agreement does not provide sufficient guidelines for dispute resolution and you and your partner cannot settle the matter, you may be able to bring your disagreement to court. A Texas judge will be able to make a decision for you, such as setting a price for a buyout or directions to dissolve the company. The judge’s decision will depend on the legal structure of your company. For example, the treatment for a partnership may be different than that of an S-corporation or C-corporation.

If you find yourself in a disagreement with a business partner and you are having trouble finding a compromise, the above strategies might be able to help you. If all else fails, you do have the option to file a suit in court and let a judge provide a solution.