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Is it Time to Break up?

 

            Business partnerships start so full of hope.  In the beginning, all participants are optimistic about the good that can come from the combination of talents, resources, and personalities.  Over time, relationships might become conflictual – the very things that drew you to your business partner grates on your nerves on a daily basis.  Is it time to break up the partnership?

 

            When you are evaluating the health of your relationship, it helps to have an objective means of assessment.  One objective measure is the Key Performance Indicator (“KPI”).  You may have heard of KPIs in business school, but they can actually help assess the health of a two-person organization.

 

            KPIs include consideration of these factors:

 

·      Desired outcome

·      Purpose for the desired outcome

·      Metrics to measure progress

·      Actions that can influence the outcome

·      Responsibility for the work

·      Recognizing achievement

·      Periodic reviews of progress

 

            When you started the business, undoubtedly, you had common goals – desired outcomes.  Over time, your goals may have diverged.  A conversation with your partner could help guide your plans to break up or double down on the business.

 

            In the conversation with your business partner, start with a simple check on your partner’s goals for the company.  Do your business partner’s goals align with yours?  Do they conflict with yours?  If you find that your goals have diverged, and that there is nothing worthwhile for you in your business partner’s goals, a break up may be in order.

 

            Opening the subject of breaking up the business might be easier with the objective metrics.  We have divergent goals; we do not share a common purpose for our work.  No blame needs to be assigned.

 

            If a break up is in order, make sure you have an accurate copy of the books and records and customer lists.  There is no gain in stealing the records.  Make the copy to which you are entitled as an owner and maintain the records in the business offices, in the normal course.  If you have time to do so, and you do not regularly manage cash flow, watch cash flow over a month or two.  That might inform your sense of the value of the business.

 

            If your organizational documents do not specify a process for dissolution or buy-out, you may negotiate for process.     

 

            Talk to your attorney about the possible process and outcomes of a business break up.  Develop your sense of your preferred outcome and the worst possible outcome.  Be prepared for the negotiations to come.

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