When founders of a firm perceive a common tendency in each other, it’s the ability to assume risks. An entrepreneur begins the tricky business of commencing new business often alone – perhaps with a partner or two willing to join him/her on a limb. The initial activity is an innovative phase, often laden with pitfalls and additional risk-taking, as the operation gets going, the client base is established, and the clients begin to be serviced on a reliable basis. It’s an exciting time. Most partners during this phase like to “strike while the iron is hot,” a euphemism for remaining focused on positive growth. Trust is often cemented between partners as a type of bonding occurs.
Unfortunately, eventually the “honeymoon is over,” and maintenance phase kicks in, the grueling continuance of business that must evolve every day, and when it doesn’t, rifts between partners can develop. If no shareholders/partnership agreement is in place, the tiny ripples of contention inevitably grow into rogue waves of animosity. That road is one that should be less traveled, especially if an attorney skilled in the art form of partnership dispute prevention and resolution is fortuitously engaged.
Such consultants deal with issues critical to business partners on a routine basis, and so become quite skilled at their craft, until it’s honed into an art form.
These competent attorneys are familiar with the ins and outs of retirement (buyout) provisions and amounts, compensation systems and appropriate amounts, separation (split-up) involving parties that continue to practice, and family issues – matters of clan and other which can poison the waters for so-called “strangers,” no matter how intimate.
Retirement/buyout issues are often a big deal as firms struggle with a crisis of succession that inevitably ensues if not planned for.
Compensation has received a lot of extra attention since the Great Recession began in 4th Quarter 2007.
Often the most devastating facet of an internal owner conflict is a split-up or separation by one or more owners.
Disagreements among family members goes without saying as perhaps the most highly charged issue of all.
The best way to avoid or mitigate these issues is to make sure a comprehensive agreement is created at the outset of incorporation. Face-to-face discussions can help prevent wounds between slightly estranged partners from festering. Finally, if it seems like a good idea to retain a competent attorney who practices the art form – it probably is.
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