In business, partnerships serve an essential purpose allowing individuals with complementary skills to come together and pool their resources to achieve a common goal. While partnerships can be beneficial, they can also be a source of conflict. It’s essential to have a plan in place for how to resolve disputes so that they don’t get in the way of business operations in Massachusetts.
Consider mediation or arbitration
Mediation is a process in which a neutral third party helps you and your business partner communicate with each other and try to reach an agreement. Mediation is less formal than arbitration or litigation and can be less expensive. It is also confidential, meaning that your dispute’s details will not become a public record.
Arbitration is a process in which a neutral third party hears both sides of the dispute and makes a binding decision. The arbitration method is more formal than mediation but can be faster and less expensive than going to court.
Buy out your business partner’s interest
If you and your business partner cannot resolve your dispute, even after mediation, one option is for one of you to buy out the other’s interest in the business. The decision to consolidate the business may also lead to other disputes. Ensure that the original dispute can be solved by one partner leaving, and involve legal teams to ensure a smooth transition.
Dissolve the partnership
Dissolving your partnership is another option if you and your business partner cannot resolve your dispute. Dissolution of the business means that the business will be terminated, and its assets will be distributed among the partners per business law. Dissolving a business is a difficult decision, but it may be the best way to protect the interests of all involved.
Sell the business
Finally, selling the business is another way to resolve disputes between business partners and requires the agreement of all interested parties. Selling is an option some smaller businesses may not have the advantage of taking. Even so, selling can be a lucrative way to solve disputes and protect or increase your assets.
When business partners have disagreements, it is important to resolve them in a way that is fair to both parties and protects the interests of the business. There are several options for resolving partnership disputes without going to court, including mediation, arbitration, buying out your business partner’s interest, or dissolving the partnership.