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Business partners should plan for a ‘divorce’ at the beginning, experts say

Columbus Business First

Steve Barsotti offered the following insight as part of a larger article looking at the need to plan for splits between business partners:

The operating agreement and other documents should capture important points about how the business will be run, who is bringing what to the table and how you would determine the value of the company if someone wants to sell their interest, said Steve Barsotti, a director at Kegler Brown.

“You want to set all the rules before the business is worth something and everyone can align on what makes sense and what’s fair,” he said.

The right documentation not only protects people, it protects the business, Barsotti said.

If there’s no formal agreement and the parties cannot reach an acceptable resolution, the default mechanisms for addressing what to do with the business are not ideal. The result does not typically reflect the company’s true value, he said.

Sometimes, that threat of “mutually assured destruction” does bring the parties to the table to find a compromise.

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