Greed and paranoia when business partners fall out

Over the years I have dealt with a number of business partners, be they directors or shareholders, including husbands and wives working together, who for whatever reason have fallen out with each other.

One example was a husband and wife who owned their business as partnership. After their marriage failed they ended up working as sole traders but retained the partnership which owned the business premises, she occupying the top two floors, he, the bottom two. Their staff had to ensure the two never met.

The two were running complementary businesses, PR and events, and their only common interests were the premises and the long-term lease on the photocopier!

Their 5 years battle about what to do with the premises was more emotional than practical.

In another example, two 50/50 shareholder/directors in a plumbing business used the business to ‘beat each other up’. An example is when one partner terminated the mobile phone contracts for 50 phones, used by the company’s engineers!

Disagreement about valuations, buy-sell margins and terms all inflame the situation. Notions such as a win-win tend to go out of the window in such circumstances. When helping resolve such situations, I always suggest to clients that they should all be equally unhappy with the outcome: lose-lose!

It is important to separate emotions from reality and this can be particularly difficult if the parties try to solve the issue themselves.

This is why, as with divorce, impartial advisors or mediators are essential for achieving a resolution. It’s all about drawing a line in the sand to complete the separation fairly and finally so they can get on with running the business.

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