Establishing a Business Partnership Exit Plan

Disputes between business partnerships can be particularly detrimental, not just to the health of the personal relationships involved, but also to the business partnership itself. From time to time, a partner will want to exit the partnership, and without a properly drafted and executed exit strategy, the business partnership – and the partners that make up the business – can find themselves in the midst of contentious business litigation.

Some of the most common business partnership litigation pertains to disputes about the following exit plan issues:

• Valuation. The worth of the business is one of the most commonly disputed issues involved with business partnership litigation. Even if the partners have developed an exit strategy, the valuation methods used to determine the payout upon dissolution or the value of the exiting partner’s shares can vary wildly. If the exit strategy does not set forth the valuation method to be used, litigation can arise.

• Unanticipated Events. Unfortunate and unexpected events, such as death, divorce, and disability often change the course of a business partnership and can lead to the dissolution of the business or the departure of one or more of the business’s partners. Disputes often center on salary and benefits for the heirs of deceased partners, whether an ex-spouse is entitled to business shares or a role in the partnership, and whether the business will fund disability benefits.

• Termination due to conflict. Personality conflicts often lead to unresolved business partnership conflicts that ultimately result in the expulsion of a business partner. In these cases, bitter and contentious litigation often results regarding a host of conflicts and disagreements, including valuation. An exit strategy can plan for such events, but because termination and expulsion often touch on emotional, personal issues, a written exit strategy often does not ward off impending litigation in these cases.

If you are involved in litigation regarding the business partnership exit plan, the following factors can play an important role in the success of your legal claim:

• Leverage
• Forum
• State law requirements
• Applicable fiduciary duties
• Witnesses and allies

The knowledgeable Chicago business law attorneys at Lubin Austermuehle will consider factors such as leverage, forum, state law, fiduciary duties, and available witnesses, in order to assess the merits of your business partnership legal claim. Once a litigation strategy has been chosen, we will vigorously advocate on your behalf in a court of law in order to reach the most favorable resolution of your business partnership exit plan.

If you are facing a business partnership dispute regarding the applicability of the partnership exit strategy, contact the skilled Illinois business law attorneys at 630-333-0333 at Lubin Austermuehle to learn more about how we can help you protect your rights through business litigation.