It is a sorry state of affairs when business partners are in discord, so much, that it causes a partnership dispute, and most of us in the private investigations business probably wouldn’t be in the business, if the partnership had been established in the right way to begin with.
When partnerships start out, the members are usually friends, family and know each other. That is why many partnerships are based on the “handshake” theory. While that’s great for the friendship, it may not be great for the partnership at least not 10 or 15 years down the road.
I can’t tell you the number of cases I’ve worked on here at Nickels Private Investigations where the partners were highly emotional, and problems arose solely because there was not a written partnership agreement.
So, if you are thinking of starting a partnership, or in the middle of a partnership that doesn’t have a formal agreement made up. Do one now! It will save you a lot of work and you a lot of money.
1. Be sure you put all of your agreements in writing. You don’t want to be stuck in a situation where you agreed on a handshake, and then 20 years down the road you find yourself in a partnership dispute with no evidence, no contract, no nothing!
2. When you have an agreement in writing, if things go sour, the partnership dispute can be resolved fairly easily.
3. When you are forming your corporation, be sure that you use the right balance of power in the business. The following example will demonstrate an inbalance in a partnership.
Let’s take an example of a case we at Nickels private investigations have been working on. Two men got into a partnership dispute after 20 years of being in business. They did sign an agreement which made the dissolving of the partnership fairly easy, but what they didn’t do was balance the power of the partnership out well. In this partnership the two men were 50% owners but there was a three person board, made up of the two men, and one of the men’s wives, which in the end created an unbalance of power. What they should have done is actually chosen a third unbiased partisan for the board member, like an attorney or an accountant instead of a family member.
