Some business partnerships endure for decades. Other times, one partner decides to exit, or a dispute erupts in which partnership dissolution is the only remedy.
Regardless of how large or successful a business is, ending a partnership works best if you already have a plan. These arrangements ensure the process of severing a partnership proceeds smoothly.
A partnership dissolution plan also has other advantages.
1. Guides procedure
A well-drafted plan contains instructions on what will happen if a dispute or another event threatens the business partnership. That means shareholders and partners need not brainstorm solutions on the fly. Instead, you can look to your dissolution plan to determine the next steps for all involved parties.
2. Provides options
When conflict sets the stage for a partnership dissolution, it is not uncommon for one or more parties to feel aggrieved. Your dissolution plan should contain provisions that minimize the risk of business litigation. For example, include a clause stating that the parties to a dispute must seek to resolve the matter outside the court (mediation or arbitration).
3. Legally binds
If the plan prioritizes the interests of the company, partners and shareholders, the parties will likely be satisfied with the outcome of the dissolution. Since final dissolution agreements are legally binding, you can rest easy knowing the matter is settled. However, it is vital to have a legal review of the plan to ensure it preserves everyone’s interests.
Like other states, Texas has laws to guide business changes, including partnership dissolutions. Learning more about these laws ensures your company suffers no hardships when dissolving a partnership or the business itself.