While people rarely enter a business opportunity with the hopes of failing, a significant number of ventures fall apart in dramatic fashion. Even though the reasons for a business divorce are myriad, many can be traced back to partnership disputes that grew in scope over time.
With a strong strategy focused on the future and a detailed plan for success, even a well-crafted business partnership can erode over time. Every situation is unique, but there are numerous common reasons that a partnership dispute can spiral out of control, including:
- Breaches of fiduciary duty: It is a broad concept, but numerous partnerships dissolve over the mismanagement of funds. Commonly, this stems from one partner believing that he or she could do better than the partner who is in control of the finances. Disagreements centering on payroll, accounting, investing or purchasing can all become aggressive disputes.
- Resource allocation: While there is an attempt to provide future guidance for the organization in the partnership agreement, it is not uncommon for thoughts and goals to change. When new situations arise, for example, such as purchasing equipment or stockpiling inventory, partners might have disputes in the interpretation of the agreement or how to make business changes on the fly.
- Separation of responsibility: Early on, the partners will likely discuss the division of responsibility. Who makes what decisions? Who oversees what aspects of the organization? Unfortunately, this can cause a rift that might never resolve. Invariably, one partner will feel the separation of responsibility is unfair.
- Unfairly distributed workloads: In any venture, partners often felt either overlooked or overburdened. It is rare for anyone to feel their responsibilities are right where they should be. Unfortunately, when partners feel they were given too much work or too often overlooked, it can lead to a dispute, a disruption and the eventual partnership divorce.
In a world where many businesses end due to criminal activity or catastrophic financial disaster, it is not uncommon for a simple disagreement to eventually become a company-destroying avalanche. Fortunately, an experienced legal professional can provide the guidance necessary to dissolve any size organization.