What is a “Corporate Divorce”?

Business partners signing corporate agreement documents

You know what marital divorce is, but what is a corporate divorce?

Corporate divorce is the break-up of partnerships, limited liability companies (LLC) and corporations. This can be between best friends, a co-worker, a significant other or a family member when either of you realizes it’s not a good fit or wants to pursue other avenues. A business break-up can be just as painful and expensive as a marital divorce if a plan is not put in place at the time or anticipated in the beginning.

Corporate divorces can be tricky and emotional. It can be between best friends parting ways, or even family members. Emotions can make the best of us turn a corporate divorce into a situation that may cause irreparable damage to your personal relationship with the other partner.

How to handle a corporate divorce

The best way to avoid the pain and stress of a business breakup is to have a plan in place while you and your partner are forming the business. While we hope that you and your partner never run into problems, it’s best to be prepared for the worst. The best approach to ensure everything is legal and will hold up if, worst case, the partnership breaks up is to have a small business lawyer draw up a buy-sell agreement in case one of the partners needs to leave the business. Think of it as a prenuptial agreement – but for business. A buy-sell agreement will address the particulars of how your business partnership will be dissolved before it reaches a crisis point. It helps protect both sides of the agreement.

Call us at Dan Burke Attorney at Law to set up an appointment with our experienced small business lawyers. We can help you step-by-step prepare for the worst-case scenario or help you navigate the rough waters of a corporate divorce.

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