What are some options for solving a business partner dispute?

On Behalf of | Nov 7, 2022 | Blog, Business Law

Pennsylvania partnership disputes often become complicated. Although you’re dealing with a business, human emotion plays a big role. And disagreements can turn into major issues.

File a lawsuit

Lawsuits occur often when a partner engages in misconduct. In matters of partner disputes, misconduct includes activities such as fraud and stealing from the business. In situations such as these, a lawsuit is generally the best option.

Hire a mediator

Mediation is worth considering when business partners want to avoid time in court. Partners can choose mediation when they want to continue working together. A mediator is a third-party neutralwith no vested interest in the business. This person facilitates communication and decision-making between the partners.

Successful mediation avoids the need to file a lawsuit. It’s also less expensive than paying the legal fees associated with litigation. When mediation is successful, business partners reach a resolution that solves the dispute.

Leave the business

In some situations, business partners decide they can no longer work together. But that doesn’t mean they want the business to fold. In this situation, it’s often possible for a partner to buy out the other one.

If the partners have a buy-sell agreement, that will give instructions on how to proceed. Creating a buy-sell agreement when starting a partnership is a business law tactic that is useful should the partnership fall apart. Without such an agreement, things become a bit more complicated.

A company valuation will determine the value of each partner’s ownership. The partners then negotiate who will sell their stake in the business. The partners then decide on the terms and conditions under which the buyout will occur.