19 Sep 2017
I often tell people that starting a small business with a partner is similar to a marriage. You share your hopes and dreams for creating a successful future with someone else. Frequently, you will spend more time and share more of your concerns with a business partner than you will with your spouse. So, what happens if things do not work out? What happens if you have to endure a business divorce?
Similar to the end of a marriage, you may experience emotions of loss, insecurity, fear, perhaps even betrayal. Beyond your emotions, you may have financial assets and/or liabilities to divide. You may have employees, customers, vendors who all need to be informed and potentially divided between the two partners.
The thought of this may now be making your palms sweat and your heart race. Have no fear; there are many things you can do now to prepare for the dissolution of your business, even if it never happens
If you have a Nevada Limited Liability Company (“Nevada LLC”) and you have worked with me in the past, you know I believe it is vital for you to have an Operating Agreement. An Operating Agreement, although not legally required for a Nevada LLC, can set forth the rights and responsibilities of the Members of the Nevada LLC. It can spell out how you add additional Members; how you sell Membership Interests; and in the case of a business divorce, it serves as a prenuptial agreement.
In 1985, Aretha Franklin released one of her best selling albums. The title track was Who’s Zooming Who – an upbeat song about the push and pull of pursing a new relationship. To their core, business relationships are simply that – relationships. How should you decide whether a person is the right person to become a business partner? In addition to delving into your business partner’s characteristics, the question requires a glance in the mirror to see what you, truly, bring to the table.