Building, developing, and growing a successful business is not easy—especially in today’s competitive economy. You may reach a point in which you want to add a new partner to your company. Doing so can be excellent to further expand and develop a business. At the same time, it can also increase the risk of a dispute. It is crucial that you take the proper steps to restructure your business and protect your interests. Here, our business dispute lawyers highlight four tips to help you reduce the risk of a dispute when restructuring a business to add a new partner.
1. Make Sure You Have the Right Business Structure in Place
When you add a new partner to your company, you may need to fundamentally restructure the business. What exactly will be required always depends on the specific nature and needs of your company. That being said, it starts with ensuring that you still have the right business entity in place for your specific needs. In some cases, a change in entity structure is required.
For example, if you were operating a sole proprietorship, you may need to change your company to a partnership. Alternatively, the new addition may necessitate a change from a general partnership (GP) to a limited partnership (LP) or limited liability partnership (LLP). The right business entity reduces the risk of disputes and protects your rights should one arise.
2. Review and Revise the Partnership Agreement or Operating Agreement
When you add a new partner to a business in Nevada or Utah, it is imperative that the time to review and revise the partnership agreement, the operating agreement, and any other important contracts that you have in place. Your rights and responsibilities arise largely from these agreements. The right partnership agreement or operating agreement reduces the risk of business disputes and commercial litigation.
3. Consider a Dispute Resolution Provision
You may want to consider putting a dispute resolution provision, such as a mediation clause or arbitration clause, in your partnership agreement. The American Bar Association (ABA) defines arbitration as a private process through which certain legal disputes are resolved by an independent party (arbitrator) outside of litigation. Mandatory business meditation and/or business arbitration is advisable for some business partnerships.
4. Proactively Address Any Problems
Disagreements between business partners should be addressed in a proactive manner, particularly when they arise while (or shortly after) a new partner is added to a business. Not all disagreements between business partners end up as costly, time-consuming, or otherwise damaging legal disputes. With a proactive approach to business disputes, you can reduce the risk of litigation.
Call Our Nevada Business Dispute Lawyers for Immediate Help
At Hone Law, our Nevada business litigation attorneys have the skills and legal expertise to handle the full range of partnership disputes. If you are locked in a dispute with a business partner, we are here to help. Contact our legal team today for a strictly confidential consultation. With law offices in Henderson, NV and Salt Lake City, UT, we provide commercial litigation services in both states.