ArticleAt the beginning of a business venture, the parties are often focused solely on getting the enterprise up and running. However, in order to avoid unnecessary complications and possible litigation, the potential business partners should carefully consider, prior to entering into any agreements governing the relationship of the parties, what happens if one party wants to leave the business venture.
Similar to a marriage, where the parties may enter into pre-nuptial or post-nuptial agreements, the parties in a new business venture should properly consider and document the terms and conditions upon which one party may exit the venture. It is equally, if not more important, to plan on the end of the business relationship as it is to focus on the details of the beginning of the relationship.
A clearly drafted operating agreement or shareholder’s agreement can provide the mechanics for a straightforward separation of the parties in the business venture and the orderly continuation or dissolution of the business entity. Prior to the formation of a new business entity or joint venture, the parties should seek legal advice in order to ensure that the parties adequately prepare for the potential separation of the parties, hopefully avoiding lengthy and costly litigation.
In our practice, working with family-owned, privately held and closely held businesses, we often advise clients through this process. As leaders have said, “if you fail to plan, you are planning to fail!”
A business and marital divorce may be an emotionally charged and difficult process. Litigation attorneys can help clients avoid pitfalls and smooth the division process, ensuring that neither the parties nor their business comes crashing down like that chandelier.
https://www.americanbar.org/groups/litigation/resources/litigation-journal/2024-summer/business-divorces-context-marital-divorce/#:~:text=A%20business%20and%20marital%20divorce%20may%20be%20an%20emotionally%20charged%20and%20difficult%20process.%20Litigation%20attorneys%20can%20help%20clients%20avoid%20pitfalls%20and%20smooth%20the%20division%20process%2C%20ensuring%20that%20neither%20the%20parties%20nor%20their%20business%20comes%20crashing%20down%20like%20that%20chandelier.
