It is never nice when someone’s health becomes adversely affected. Here we cover how to remove a business partner with their best interests and health in mind.
Dissolving a business for whatever reasons could be a saddening experience. This is particularly true when you and your partner had envisioned a long-lasting relationship and had the corporate strategy to actualize it. When the reason why your partner is leaving the business is that of their health, there is nothing much you can do to keep them at the firm. They may become inefficient, and this would do more harm than good to both the business and their mental health as individuals. That said, here are some tips to help you go through a dissolution due to health reasons in the best way possible. Best of all, the tips below ensure that both your business and your partner’s health are in the best shape they can be.
Review your contract 1
Hopefully, you had the foresight to draft a contract that both you and your partner agreed to. Here’s another place where it plays a critical role. Over the partnership section of your contract, you can review how disagreements and exits from the business are to be solved. Do not worry if the contract does not cover the particular scenario you are in at the moment. The purpose of the contract is that it can serve as an impartial reference as you make negotiations with your partner.
Enroll your partner in a medical plan 1,3
First and foremost, ensure your partner is already receiving interim treatment for whatever health complications they are undergoing. The payments could be made personally or from an insurance plan depending on their health coverage. In case your business had no specific provision for a health plan, you could both draft a clause in your partner to initiate one. This would ensure that even if your partner does not retain their shares in the company, they can receive some benefits regarding healthcare. You could also involve your partner’s family members if your partner is not in a position to cover these medical and corporate discussions themselves.
Hire an attorney 1
Getting an attorney on board for your dissolution is critical for it to be a success. The lawyer will ensure all the necessary paperwork is filed and that all clauses or terms of dissolution are well understood by both partners. In case you did not have an exit agreement to begin with, both of you can relate your wants to the lawyer. He can then help both of you through negotiations and act as a guide through drafting a fair exit agreement to you both. The dissolution can take an emotional toll on both of you, and it would be beneficial to know you can continue with negotiations without necessarily having to communicate directly.
Get a business valuation 2
Knowing the worth of your business is critical to the equal sharing of resources. In case your partner wants to be out of the firm as soon as possible, knowing the exact worth of their stake would enable you to know how much money you need to pay them. By hiring valuation specialists to find out the value of your business, you can also find out what aspects of the company are bringing you in more money and the areas you can improve upon as you go in on the business alone. This would reaffirm your strategy and significantly help you in your business’s progress. In case your partner has a dispute about the money you are paying them, a business valuation could go a long way in legitimizing your payment rates. It could also help you in planning out how much you can afford for your partner’s health plan and how your business will contribute to it.
Overall, it will ensure a smooth dissolution.
Follow these tips for a timely and smooth dissolution today.
Mathieu Paul
Director – Business Improvement
P: +618 6315 2755
E: enquiries@wabusinessvaluations.com.au
The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.
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Reference Links:
1. https://www.huffingtonpost.com/young-entrepreneur-council/break-up-with-business-partner_b_1704389.html
2. https://business-law.freeadvice.com/business-law/partnerships/dissolution-of-business-2.htm
3. https://www.sba.gov/blogs/exiting-or-dissolving-business-partnership-your-options-and-process-explained
