The Kaltons Approach – Case Study

Business Partnership Split

I was approached by a client for whom I had been previously approached jointly with her business partner. I was asked to advise on the single partner’s right in circumstances where the other partner had decided to move on and was not contributing to the business and had wanted to end the partnership.

It became apparent from the first meeting that the two partners, who were originally friends and had gone into business together as a result of their friendship, were falling out and the predictable future was that they would not remain friends for long. There was frustration on the partner who had approached us and I could hear, reading between the lines, that the other partner was very worried about incurring still more debt. I advised the partner who had come for advice that I could hear some legitimate concerns on the part of her other partner and that I felt a great deal of time and cost could be saved by having a meeting with the two partners, each of them having someone to accompany them and me acting as a neutral observer to facilitate communication and hopefully reach a settlement.

The partner who approached me went away and discussed this with her partner who was amenable to the idea and both partners came with a friend to support them and during a meeting of some 1.2 hours each was able to express concerns and then to explore options for taking things forward. Whilst the meeting started with considerable reticence, particularly on the part of the other partner, by the

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end of the meeting it was agreed that there was something worth exploring and the meeting itself took an expected turn of events and left open the possibility that the partner concerned about liabilities might take over the business and buy out the other partner.

Over subsequent weeks, we were instructed to prepare a Dissolution Agreement between them and, given the nature of the document and the circumstances, I recommended the clients each obtain independent legal advice before finalising the document.

In that process one of the partners decided that she had not raised something she wanted to raise previously (for fear of undoing the deal) and this nearly jeopardised the whole arrangement but fortunately the partners were able to reach agreement and some two months after the initial approach they came into my offices to sign the agreement and hand over the appropriate payment. There was, by this stage, no visible sign of resentment on each side and each appeared to be on track for remaining good friends, possibly supporting each other in their new business ventures.

Footnote:

This matter proved tricky at times but the initial commitment to both parties that they would have a good on going relationship, no matter what the outcome of the negotiations, provided an environment of trust in which the two parties could communicate honestly and overcome reticence and difficulties.