How to resolve a dispute between business partners

How to resolve a dispute between business partners

On Behalf of | Nov 19, 2021 | Corporate Law |

When a corporate entity is set up in such a way that there is a board of directors or a complex leadership team at the top, settling disputes may be as simple as putting the matter to a vote. 

However, many smaller businesses have only two owners, partners who decided to start the company together. They clearly cannot put a dispute to a vote because it would always be a tie, so how should they address something like this?

Exploring your options

There are numerous options that you can choose from, starting with the use of a mediator. The idea is to bring on a neutral third party who will help the two of you work together and come to a compromise that you may not have been able to reach on your own. The mediator is not biased in any direction, so their goal is to resolve the dispute, not to accomplish a specific end.

If this fails, some business partners decide to move on from the company. A major dispute over the direction of the business may mean that working together is no longer viable. In some cases, one partner will buy the other one out and continue as the sole owner of the company, and in other cases, both partners will sell the company to a third party and divide the money that they earn in the sale. This allows them to start their own companies that are better in line with their own visions.

No matter what you decide to do, it is very important to understand all of the legal options that you have, as everything you’ve invested in your company may be on the line.