When you went into business with your partner, you expected them to pull their own weight, and that’s exactly what happened – for a while. Then, something shifted. They suddenly seemed to lose interest in the company, started slacking on their responsibilities and began coming into the office less. Now, they hardly show up at all, while you’re handling all the work.
It’s frustrating, but they still have ownership rights – and their lack of participation doesn’t automatically mean they aren’t entitled to a share of the profits. If you try to force them out, withhold distributions or take control of their share of the ownership, you could end up with greater problems. What can you do?
1. Review your business agreements
Get out your partnership agreement, LLC operating agreement or other business governing documents. These may provide a guideline for each owner’s responsibilities and what happens if one fails to meet their obligations. This can give you a roadmap for formal action, including dispute resolution procedures, buyout provisions and conditions for their removal.
2. Document the problems
You need to document the issues to solidify your position. Keep records of missed meetings, neglected responsibilities, unanswered emails and messages and any financial issues created by your partner’s absences. This could be essential information if the situation eventually devolves into litigation.
3. Try a negotiated solution
Your partner may just not want to be involved in running the business any longer. Maybe changes in their personal life or health have affected their ability to stay engaged, or maybe they have mentally “moved on” to some other interest, idea or business venture, and it has captured all their attention and time. If that’s the case, a negotiated buyout could be a welcome solution. If that fails, it may be possible to redistribute responsibilities and restructure the business arrangement and compensation plan accordingly.
4. Consider legal action
If negotiations fail, your options could include pursuing a breach of contract claim or exploring whether the business should be dissolved. A Maryland business litigation attorney can help you evaluate your options, protect your interests and find a way forward without putting your entire company and future at risk.