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How can you resolve a partnership dispute effectively?

On Behalf of | Oct 17, 2022 | Business partnership disputes

When two or more people come together to form a partnership in California, it is often with the hope that they can create something great together. Unfortunately, disputes between partners sometimes arise, and they can be very costly and time-consuming to resolve. However, there are effective ways to resolve partnership disputes in a way that’s fair to all parties.

Try mediation and arbitration

Mediation refers to a process where an impartial third party (the mediator) helps the partners to reach an agreement. This can be an effective way to resolve disputes, as it allows the partners to communicate openly and come to a resolution that is acceptable to both parties.

Arbitration is similar to mediation, but the arbitrator makes a binding decision on the dispute, which the partners must accept. This can be a faster and more efficient way to resolve business disputes, as it avoids the need for lengthy court proceedings.

Sell the business and move on

This is usually one of the easiest ways to resolve a partnership dispute, especially if the partners are not on good terms. One partner can buy out the other’s share of the business, and then they can each go their separate ways. The first step, of course, is to agree on a fair price for the business. If you’re thinking of selling your business, it’s important to get professional advice from a qualified accountant or business valuation expert. This will help you to understand the true value of your business and ensure that you receive a fair price for it.

Dissolve the partnership

If mediation and arbitration are not successful, or if the partners cannot agree on a fair price for the business, then dissolving the partnership may be the best option. This involves breaking up the business and dividing its assets between the partners.

While partnership disputes can be very difficult to resolve, there are effective ways to reach a resolution. Mediation and arbitration are both effective methods, but if these fail, then selling the business or dissolving the partnership may be the best option.