Like any end to a relationship, ending a business partnership can be difficult and complicated. Without the proper legal structure set in place, this can turn into a huge burden on top of an already challenging situation. You’ll want to make sure this final agreement is handled with care, both legally and financially. Having an Operating Agreement or Bylaws will surely help but there are still ways to separate amicably without a formal document set in place. We’ll go over some essential steps to complete the dissolution or separation and avoid personal and financial headaches.
Does your business have a formal agreement in place that explains the steps to take when a business partner wants to leave? If there is no agreement in place, members will need to work out terms together. It’s vital to keep negotiations as amicable as possible but this can be problematic if the reason the partnership is coming to an end is due to a failure to see eye-to-eye. A third-party mediation can be helpful at this stage. An experienced Nevada lawyer can advise the owners if it would be better to dissolve the business or figure out terms for a resolution. They can also help draft a buy-sell or a surrender agreement essentially releasing one or more members from the business if operating the business is still in play. If that is unsuccessful, going to court should be a last resort. Court-dictated judgments can be expensive with the possibility of simply dividing assets and liabilities 50-50 regardless of the reasons behind disputes.
If your company does have an agreement set in place, usually a partnership agreement, operating agreement, or bylaws, then the terms for a member leaving the business is usually spelled out. However, it would still be a good idea to meet with an attorney to ensure you are protecting your own interests and that all parties are interpreting these governing documents correctly. An experienced business law attorney can help you understand Nevada law and the impact of any relevant agreements, such as company bylaws or controlling documents, used to end your business relationship.
Once an agreement is reached and all documents have been signed, don’t forget to remove or replace names from company documents, contracts, and any state or local licensing documents. Also, make sure the commitments the parties have agreed upon are enforceable and that all parties understand the consequences of breaching their obligations.
If you’re looking to end your business relationship in Nevada, don’t hesitate to seek legal advice. Sometimes partnerships don’t go the way you planned but ending them can go more smoothly if you decide on the goal at the beginning of the process. A business lawyer can help you with a detailed plan to get you past these situations.