No perfect way to predict the future exists. You can certainly make plans and projections and hope that the outcomes you desire are the ones you reach, but those end results do not always take place. In the business world, you certainly know that you will have to contend with the downhill periods along with the successes.
In particular, you may face disagreements with your business partner along the way. In some cases, you may have resolved the issues easily enough, and in other instances, more drastic action was necessary. Finally, you have come to the decision that the partnership needs to come to an end entirely.
Where should you start?
Just as you went through numerous steps to begin your partnership, you will also need to follow the correct procedures to dissolve the partnership. Before starting any of the legal aspects, you may want to fully discuss and assess the situation to determine who wants what from the dissolution. The actions you take can depend on who wants to stay with the company and who wants to go.
Buying and selling
If you want to remain with the company but your partner no longer sees a future there, you can buy your partner’s shares in the company. On the other hand, you may need to sell your shares to your partner if you no longer want to remain in the business arrangement. In a best-case scenario, your partnership agreement would have terms for dealing with such an issue, and you would also have a buy-sell agreement in place.
If neither of you feels that the company has a future and you want to dissolve the partnership and business entirely, you may find it beneficial to create a partnership dissolution agreement. The terms in the agreement can help everyone involved understand their roles in the dissolution process. However, signing this agreement does not terminate the partnership. You will each need to follow the procedures for settling debts and distributing necessary assets.
In this scenario, you will also need to file a statement of dissolution with the state. Because the requirements for these statements can differ from area to area, you may want to make sure you understand what requirements California has for this step. Additionally, you may find it helpful to have your legal counsel assist you with drafting any legal documents during this time to ensure that the terms reflect your goals and are legally binding.