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Category Archives: Partnerships

Finding Real Solutions in a Successful Partnership

October 17, 2017

Conflicts are going to happen, even in the most successful partnerships. As a partnership develops, some of the biggest struggles can be finding solutions to these conflicts. One of the reasons people shy away from partnerships is the possibility of disagreement. How do we put arrange things to make sure that the partnership minimizes the risk of disagreement and keeps the business progressing?

One key thing to do, when you are looking at a particular problem in your partnership, is to define the problems together before you start looking for answers.… Read the rest

The Complexities of Partnership Agreements

October 5, 2017

Partnership agreements are rarely as simple as people think they are. I spent a lot of time working on partnership agreements. What I find interesting is a lot of people think partnership agreements are simple. Give me a standard partnership agreement. We’re just doing a normal partnership agreement. These are the types of statements I might hear when somebody’s calling us, but there is a lot more complexity to partnership agreements.

Fundamentally, every partnership is different. There’s different understanding and you need to dig in and understand that dynamic.… Read the rest

Should your Partnership Discussion be Going Forward? A Quick Two-Part Test.

September 27, 2017

How do you know if you should be engaging in a partnership? How do you determine if what you are doing makes sense?  Discussions about partnerships can take a lot of time, and a partnership agreement means a large commitment of time, money, and energy. Indeed, it can even be a dangerous economic enterprise. What tells you whether you should be in or out?

Here is a quick, two-part test you can use to analyze whether your partnership discussions even make sense to go forward.Read the rest

Below the Surface of Partnerships

September 26, 2017

I was recently given the interesting analogy that partnerships are like icebergs. You can see what is above, but what really matters is below the surface, because in an iceberg, there is a lot more ice below than above. In a partnership, there is a lot more below the surface than above the surface.

There is much to think about in partnerships. We have discussed planning for the things that are likely to happen in partnerships:  the four D’s, death, disability, divorce, disagreement, and we make sure we have plans in place to protect ourselves in these various situations.… Read the rest

Where’s the Emergency Exit?

September 18, 2017

We do a lot of work crafting partnership agreements. If you’ve been a frequent reader of our blogs, you’ll know it’s something we talk about often in length. But one of the keys to partnership agreements is to have an exit strategy. So often, when we have problems in partnerships, it’s because the partners have decided to go different directions and there’s no way for one of them to safely exit without fighting with the other. However, I’m a big fan of partnerships, and I believe partnerships can add lots of economic value.… Read the rest

How to Protect Yourself When Things Fall Apart: Business Partnership, Disagreement, and Dissolution (Part II)

September 11, 2017

In Cline v. Grelock, [1] the business partners were two-lifetime friends who started a towing business called American Asset Recovery, LLC (“AAR”) d/b/a Hound Dog Recovery.  To start the business, Grelock and Cline personally guaranteed a bank loan for AAR to buy a motor vehicle for the business.  The business did not succeed. It had significant debts and did not clear a profit.  The relationship between the two co-owners also deteriorated to the point where continuing the business was not an option. … Read the rest

What to Do When a Business Partner Withdraws? Interpretation of Payout Provisions Under a Partnership Agreement

September 7, 2017

If you have been reading our blogs, you know that we write and speak often about countless issues involving business partnership, including the four Ds (death, disability, divorce, and disagreement).  Although many business owners starting a new business may think it won’t happen to them, the truth of the matter is that businesses are certain to experience at least one of them if they are in business long enough.  Disagreement, in particular, typically will happen and can cause the withdrawal of one or more business partners at an unexpected time, and when that happens, figuring out the financial aspect of the breakup can be messy.… Read the rest

Does Texas Hold a Partner Liable for a Partnership Debt? (Part III)

September 1, 2017

In our previous post, Does Texas Hold a Partner Liable for a Partnership Debt, we discussed the Texas Supreme Court’s holding in American Star Energy and Minerals Corporation v. Stowers, [1] that a creditor cannot sue individual partners to satisfy a partnership debt until a judgment is passed against the partnership and goes unsatisfied for 90 days.

There is a continuation of this story.  The partners argued that the court’s holding imposed “automatic” liability– essentially claiming that the court undermined their due process rights on grounds that they should have been named and served in the lawsuit against the partnership so that they would be on notice of their potential liability and have an opportunity to contest it.… Read the rest

All postings are intended to be planning tools to familiarize readers with some of the high-level issues discussed therein. No posting is intended to be a comprehensive discussion and additional details should be discussed with your transaction planners including attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. This article should not be treated as legal advice to any person or entity.