3 things to remember during a family business partnership split
Published 06 Jun 2017
There are a number of advantages to having a business partnership with a family member. You are able to retain more of the business overall, get to work with your loved one on a daily basis, and may be more in sync with your ideas and decisions than partners who do not know each other as well. However in the case that you have a serious dispute, it's easy for the situation to get messy, especially when it involves spouses who are undergoing a divorce. As a result, it's essential the seek advice from a Parramatta business lawyer as soon as possible to know where you stand.
If you're part of a family business partnership that is going to split, here are three of the most important things you should know going into it.
1. Understand all your options
There are several ways you can go about the split. You may decide the best option is to dissolve the business and divide the takings between you and your partner. If you would like the business to continue operating, it's possible for one partner to buy out the other and take sole ownership of the company.
Where necessary, this can be done by borrowing money in the case that the company's assets are valuable enough to provide security. Alternatively, you could look for a new partner to invest, or sell the company to new owners and divide the profit. Make sure you weigh up which option best suits your desires and circumstances.
2. Don't obsess over value
One of the biggest sources of disagreement when dividing up your business or buying out a partner is valuation. Naturally, partners will often try to get the most out of the split that they can, and disputes over what assets are worth can lead to heightened conflict. Remember that at the end of the day, there is no perfect formula for valuing a business. You are better to balance your assets and potential future profits and accept a fair price for the sake of getting a resolution promptly.
3. Know when to make a clean break
Finally, it's usually best to seek a clean break whenever possible. If the partners are ex spouses it will allow them to move through the property settlement process more quickly, and for relatives it maximises the chances that the individuals will be able to restore their relationship in the future.
If you'd like more information on partnership splits in family business, or to find out the whether you have a legal leg to stand on, get in touch with the commercial law experts at Malouf Solicitors.
Please call us on 02 8833 2000 to speak with a lawyer
I remain extremely grateful for Maloufs legal representation related to my financial management of the estate of my brother and for your continuing help and advice in this matter. As an aside, I always recommend Maloufs to my friends and family members who are seeking the best legal representation - only last week, I strongly advised a close family friend that their best interests would be served by arranging an appointment at your Parramatta offices.
John of Parramatta NSW