You’ve built a business together but now something or other has made it clear that you will need to go your separate ways. Maybe it’s a mutually agreed upon decision – or maybe you are expecting a tense and bitter battle to determine the percentage of ownership and the division of assets.
Either way, you can contact a corporate lawyer to get started on figuring out the best course of action to completing the business split without taking any missteps.
Revisit the initial business documents
The first step is to go back and look at the initial agreements that were set up upon the formation of the business. If you took the time to prepare for all possibilities with the assistance of a corporate lawyer, the legal next steps and responsibilities should be clearly outlined. With that in mind, it is possible that these documents did not address a breakup, or they are not specific enough to be relevant in your situation. If this is the case, you will need to hire the services of a corporate lawyer to come to a peaceful and fair resolution.
Is the split amicable?
With businesses, just like in the case of a divorce or separation, it will be easier, quicker and less expensive to come to a resolution if the split is amicable. Each party can work with a corporate lawyer to fairly assess the value of the business and ensure that assets are divided up equally.
If the split is the result of a dispute and emotions are high, it will be more difficult to define what each party is entitled to.
Get a Business Valuation
Deciding on the best course of action requires getting an idea of the true value of the business. For this, you will want to have your business examined by an independent third-party company. Once the total worth of the company is determined, taking into account future considerations, you will have the info you need to go to the next step.
How will the business be divided?
If all parties want to leave the business, it will be a matter of selling off existing shares or assets, settling any business debts, dividing up the remaining finances and allowing everyone to go their separate ways.
On the other hand, if one owner will still be staying in the business, it becomes a bit more complicated. The party leaving the business will need reassurance that they will be properly compensated, regardless of what happens with the business after the point of the separation. The reality of this is that it may not be possible to pay a lump sum – you will likely need to draft up an agreement with the help of your corporate lawyer.
Contact Epstein & Associates
Each case involving the split of an existing business relationship will have unique nuances which can only truly be addressed with the help of a lawyer. Take advantage of an Epstein & Associates free initial consultation to discover how our legal team can represent you and your interests in your business case.