Business breakups – like any relationship breakdown – are stressful and often one of the most traumatic life events to go through. But they don’t have to be.
What happens if within all these lockdowns you and your business partner no longer see eye to eye and one of you wants to get out?
Here is Scott McKenzie of Velocity Legal in Melbourne with some insights about business co-ownership disputes, or in short business breakups
Here is what we learned but please listen in as Scott explains all this much better than we ever could.
To listen while you drive, walk or work, just access the episode through a free podcast app on your mobile phone.
Here are seven factors that determine how easy or hard business breakups turn out to be.
1 – Attitude
The biggest factor determining whether you will have an easy or messy split with your business partner is the attitude and frame of mind you bring to the table.
If you both come to the table to-give-and-take and to live and let live, then you fare much better.
2 – Future Plans
The more both of you focus on your future plans and just want to be free of the current mess, the quicker and hence more painless you will part.
3 – Pre-Nuptials
The more work and thought you put into the end at the start, the easier the end will be. So while you are still in the honeymoon period, agree on how you will part one day.
4 – Value
The more valuable the business is, the more is at stake and the more partners are likely to fight.
5 – Points of Contention
For professional services, the points of contention are around client retention (who gets which clients) and restraints to practice (where can you set up shop after the split).
For product services, the sticky points are brand, social media presence, and supply chain contracts.
The more you agree on these points, the easier you part.
6 – Easy to Value
Some industries are really hard to value due to current circumstances, for example, a lockdown. The business might currently be doing much better or much worse than usual and then it gets really hard to find a value both parties can agree on.
7 – Watch Your Language
Even if all else is lost, if you both keep your emotions under check and try not to say things in an email that you wouldn’t say face-to-face, then you still have a good chance to quickly get out of this.
You both save a lot of money if you sort this out between you and don’t require lawyers.
Disclaimer: Tax Talks does not provide financial or tax advice. All information on Tax Talks is of a general nature only and might no longer be up to date or correct. You should seek professional accredited tax and financial advice when considering whether the information is suitable to your or your client’s circumstances.
Last Updated on 13 September 2021