Partnerships often start with excitement and anticipation. It seems that this new partnership will be beautiful forever.
Some partnerships do last forever but as business owners, it’s best to plan for a future that may include one or more partners leaving the partnership.
As you’re setting up your partnership, here are several issues that need to be addressed clearly and concisely.
Contributions – what is each partner’s stake and how are they providing that contribution?
Disputes – how are disputes settled? Will there be a vote? Will there be a third party hired to mediate?
Distributions – how will the businesses profits and expenses be distributed between the partners?
Developments – what happens if one of the partners dies suddenly? How will the partners handle the need or desire of one partner to leave the partnership?
Dissolution – how will the partnership eventually be dissolved?
Setting up a partnership agreement to survive when one or more partners are ready to move on is complicated and important. Don’t risk the survival of your business by avoiding the establishment of a partnership agreement that everyone can live with.
Have more questions about creating a partnership agreement? Register here for the Denver Entrepreneur Education Network (DEEN) events. In June of 2019, Shina Culberson of Quist Valuation will talk about surviving a business divorce. You won’t want to miss this!