When Business Partners Disagree on Selling: What You Need to Know
Selling your business is challenging enough when you’re the sole owner. If your company is a partnership, you might find that the transaction goes seamlessly, or you may have a partner dispute that stalls the sale.
Here’s a closer look at some common causes of partner disagreements and some helpful conflict resolution strategies.
Common Causes of Partner Disagreements
Business partnership disputes can arise out of almost anything. However, if you’re selling your business or planning to in the near future, keep these common causes of disputes in mind.
Business Valuation Disagreements
When you’re selling your business, your business valuation is a key piece of data. It’s the foundation for your sale price, so when business partners disagree on the company’s worth, they might become locked in a dispute almost immediately.
Different Growth Strategies
Most business owners believe that it’s wise to sell a business during a growth trajectory. If your numbers start to decline after listing, the company may be less appealing to potential buyers.
However, partners might not agree on the precise timing of the sale within that growth trajectory. When these disputes happen, one partner usually wants to sell immediately. The other wants the company to grow some more before it goes on the market.
Vague Partnership Agreements
When you open a business with someone else, one of the most important steps is drawing up a detailed partnership agreement. Some business owners believe they’ll just discuss issues as they come up, but this strategy is rarely successful.
When your company has a vague partnership agreement (or none at all), both parties may become confused about their roles and duties. Partnership agreements typically outline how disputes will be resolved, so if you don’t have a well-prepared agreement, it may be difficult or impossible to navigate the dispute on your own.
Strategies to Resolve Conflicts
If you and your business partner are involved in a dispute, these are some potential strategies for conflict resolution:
Check Your Partnership Agreement
Some business partnership agreements specify that you must attend mediation or follow another specific procedure to resolve your dispute.
Set a Specific Time for Discussion
If you want to truly resolve a partnership agreement, plan a time and place to sit down and calmly discuss your issues. Some disputes can be resolved this way, but it often helps to have a knowledgeable third party present.
For example, because your business broker understands your company and the sales process, they may be able to help guide you toward a resolution.
Attend Mediation or Another Kind of Alternative Dispute Resolution (ADR)
For business partners deadlocked in a dispute, mediation is probably the best type of ADR. During mediation, the two parties sit down with a trained, impartial third party. The mediator helps the parties work toward a solution, but they are not required to come to an agreement.
If you and your partner do reach an agreement during mediation, it typically is not legally binding.
Navigating a Dispute? Your Business Broker Can Help
Business partner disputes can turn acrimonious very quickly. However, when you have a skilled intermediary like a business broker, a legal professional, or both, you and your partner may be able to reach an agreement and finalize the sale.
When you’re choosing a business broker, you shouldn’t just select the first one you find. The Sunbelt Business Brokers team has helped small business owners navigate the sales process since 2015.
If you’re struggling with a partner dispute or just looking for some guidance while selling your business, call us or get in touch online today!