Breaking up is always a challenge. Whether in personal relationships or professional ones, ending a partnership often involves complications, even when both sides believe it’s necessary. When your job and finances are affected, what steps can you take to ensure fairness, reduce conflict, and maintain the relationship?
The initial action is to recognize the emotional aspect, says Melinda Emerson, consultant and author of Become Your Own Boss in 12 Months. “Ending a partnership can be more difficult than ending a romantic relationship,” Emerson remarks. “However, this shouldn’t dictate your actions. Business decisions should not be made based on feelings.”
Instead, clarify your goals throughout the separation. For some, maintaining the friendship is key, while others may prioritize the stability of the business. For instance, if selling the business for a profit is the aim, dwelling in hostility with your partner is not a luxury you can afford. “You can collaborate with the person you dislike the most if necessary,” Emerson suggests. “Don’t let your anger lead you to make hasty decisions that you will later regret.”
Maintain open lines of communication. Kathi Elster, co-founder of K Squared Enterprises, which specializes in resolving workplace conflicts, and co-author of Mean Girls at Work and Working for You Isn’t Working for Me, notes that clients often experience a communication breakdown. “Almost every time, both parties aren’t talking to each other,” Elster mentions. In her initial sessions, she has each participant express their concerns while the other listens attentively. Due to their emotions, it’s common for them to struggle with accurately summarizing what they’ve heard.
To counteract this type of communication impasse, Elster emphasizes the importance of continual dialogue. If tensions are high, consider scheduling a meeting in a neutral location away from the office. Changing the environment can introduce a fresh dynamic to the discourse and minimize the risk of confrontations in front of staff. “Observing conflicts can create division within the team—they may take sides and leave, which is undesirable,” she warns.
Lay down your defenses. Lowering your voice—whether physically in a face-to-face conversation or in tone via email or text—can foster a more respectful communication atmosphere. Make an effort to understand the other’s perspective, accept responsibility, and show humility. “Conflict is an inherent part of human relationships,” Elster acknowledges.
Seek external assistance. Keep your accountant’s contact readily available to ensure that objective figures prevail during emotionally charged moments. If tensions escalate, consider engaging an impartial third party for help, which may include a business mediator, therapist, coach, or your company’s CPA. However, proceed cautiously when involving a lawyer, as Emerson cautions. “Once you consult an attorney, the friendship might be irreparably damaged.”
Be pragmatic. If you have a succession plan or any formal agreements, adhere to those guidelines. If such documents do not exist, be prepared to negotiate. “Ending a partnership can become contentious if both parties are unwilling to be flexible,” Elster notes. Emerson encourages business owners to prioritize their peace of mind—even if it means accepting slightly less financially. “The goal is to let go and move forward swiftly,” Emerson insists. “The value of mental peace is immeasurable.”
David MacVean
CEO
Company: Security Investment Partners, an investment management firm located in San Diego.
Reason for Breakup: Disagreement regarding the retirement timeline of a partner.
Winning Strategy: The partner made a smooth exit and joined another firm, successfully preserving their friendship.
I collaborated with my partner since the 1980s, working at a major bank and later at a smaller firm. He is 25 years older than me and was my mentor during my early career. In 2005, I expressed my desire to launch my own business and invited him to partner with me.
I incorrectly assumed that within a few years, he would be nearing retirement age, which aligned with my ambitions of eventually owning the business independently. There were two flaws in this assumption: Firstly, we never openly discussed it, and secondly, when I revisited this topic three years ago, he was clear that retirement was not on his agenda. I was taken aback, but we continued our effective partnership for another year.
Eventually, I firmly expressed my intent to take sole charge of the business and organized a meeting away from the office. I arrived with a detailed agenda that included various buyout proposals.
Once again, he reiterated that he wasn’t prepared to retire and wouldn’t be until he reached the age of 80, which was a five-year wait. I proposed a buyout plan to transition by that time. He insisted he preferred the status quo, although we did agree that I would receive a larger salary for my management duties and that I would oversee any new clients while our current clients would still be managed jointly.
Ultimately, about six months later, I asserted that I wanted a concrete exit strategy, yet he maintained his unwillingness to retire. A month later, he approached me to announce that he had joined another firm and that his lawyer would send over an agreement that evening. I was stunned and apprehensive because he sought outside counsel while we had a retainer attorney. However, when I reviewed the email that night, it contained a straightforward two-page agreement granting me full ownership of the company, while he would retain the clients he managed. I felt immense relief and gratitude, and I called him immediately to express my thanks.
Subsequently, we supported each other in tying up the remaining loose ends and finalizing the agreement, even co-authoring a letter to our clients announcing the dissolution of our partnership. We’ve remained close friends and had a rewarding partnership for a decade.
Betty Brennan
President
Company: Taylor Studios, specializing in exhibit design and manufacturing, based in Rantoul, Illinois.
Reason for Breakup: Following their divorce, the partnership became increasingly contentious.
Winning Strategy: She slowly bought out her partner, reaching a fair valuation while committing to maintain their friendship.
I founded this company in 1991 alongside my husband, and we held equal shares. Our marriage dissolved roughly five years later, yet we managed to sustain a productive business partnership and a solid friendship.
Over time, differences arose regarding company operations, employee management, deadline setting, and project pricing. The rapid growth of the business meant that roles often shifted, leading to frequent disagreements without a clear process to resolve who had the last word in various situations. Tensions escalated to the point where we would find ourselves shouting at each other outside the office, away from employees who might overhear, even though we could still enjoy each other’s company as friends after hours.
For a decade following our divorce, we jointly managed the business. During that period, I gradually increased my ownership stake by buying out portions of the company, while he relinquished his shares. Given the ongoing conflicts while operating together, the decision to end the partnership came fairly easily. By 2006, when the buyout was completed, he had established a new business aligned with his preferences and personality, while Taylor Studios transformed into a company better suited to my vision.
The final step in dissolving the partnership involved agreeing on a fair valuation. Neither of us wanted to incur the $10,000 expense for a professional assessment, so we turned to software solutions that provided various valuation methods. We both had figures in mind that we felt were reasonable, and ultimately, our estimates were close enough to agree on a midpoint value.
The crucial factor was our mutual desire to dissolve the partnership while ensuring our friendship endured. To this day, I maintain frequent contact with him and his partner, often watching over each other’s pets. Occasionally, I reach out with inquiries related to clients or past projects, and our business discussions still continue.
Christina Daves
Former Co-Owner
Company: Details for the Home, rebranded as Details: A Unique Gift Boutique, in Haymarket, Virginia.
Reason for Breakup: Personal issues necessitated distinct career paths for each partner.
Winning Strategy: They prioritized open communication and friendship as paramount.
My closest friend and neighbor launched the boutique with me in 2002, and for the majority of our nine-year partnership, it was an incredible experience. We thrived as both business partners and friends—our children attended the same schools, and we coordinated carpools. I spent more time with her than I did with my husband.
However, after about eight years, I began to feel overwhelmed. On one occasion, while I was attending my son’s hockey game in Detroit, she called to inform me that multiple staff members had called in sick, and I was unable to assist her. The demands of the business were harming my family life. I vividly recall a moment when my daughter, then eight, asked, “Mom, why have we never baked Christmas cookies?” Balancing a retail business and parenting was challenging, and I found myself growing resentful of the business, as I sensed my partner felt frustrated whenever I couldn’t be there to support her.
Around this time, my partner was dealing with a divorce and required a full-time income. The store was quite prosperous, but it only generated enough revenue for one full-time wage, which we split.
One day, as she shared her plans for maintaining financial stability post-divorce, I posed the question, “Could you manage if you bought me out?” She had anticipated I would initiate this conversation, and deep down, I was considering exiting too. I worried about how this might jeopardize our friendship and the store’s future. Both were equally significant to me. She replied, “It seems obvious you’ve been unhappy for quite some time.”
The atmosphere was tense for a period as we broached financial topics that can often be contentious. Nevertheless, we kept the dialogue open and made concessions to reach a resolution. We relied on our trusted accountant to work through the intricacies of the valuation and the buyout agreement. I agreed to a five-year, no-interest buyout with monthly payments, knowing the financial capacity of the business. Ultimately, our priority was preserving both the store’s success and our friendship. The boutique continues to thrive, and we remain best friends. When she recently faced a business challenge, I was the first person she reached out to for guidance.
