Business Partner Making Decisions Without You? How to Respond

Business Partner Making Decisions Without You

Bringing on a business partner often lightens the load, but tensions can surface if your co-captain starts making decisions without your input or consent. Getting blindsided by your partner acting unilaterally can spur feelings of distrust, undermine morale, and disrupt once-productive collaboration.

But, before reactive emotions cause irreparable conflict, know that there are constructive ways to respond when a business partner doesn’t involve you in important decisions impacting shared interests.

Here are some critical actions you can take to rebalance scales before permanent interests or relations sour.

Start With Reviewing Your Agreements

Foundational documents like Shareholder Agreements and Partnership Agreements dictate governance, decision rights, and general member conduct.

Before reacting, thoroughly review the terms pertaining to the following:

  • Delineation of Authority
  • Unilateral Decision Making Allowances
  • Breach of Contract Clauses
  • Buyout Provisions
  • Dispute Resolution Mechanisms

If respective agreements lacked robustness around conflict resolution (common amongst friends), rely on prevailing California partnership laws for guidance. Statutes prohibit any partners from acting detrimentally without consent.

Open Communication Lines

Before lawyering up, request an in-person sit-down in neutral territory to directly but compassionately address issues. Partners often assume actions are justified or opt for avoidance rather than facing tensions.

Frame concerns around business health versus personal objections. Bring evidence of damaged relations with employees, vendors, or customers. If receptive and acting in good faith, the other party may concede adjustments, realizing continued success hinges on cooperation. Come prepared with proposed solutions – not just problems.

While hoping for good faith reconciliation, brace for potential stonewalling or dismissals. Not all people retain a capacity for self-reflection, particularly when drunk on newfound power and influence.

Consult Business Litigation Attorneys

If initial talks don’t get anywhere, business litigation attorneys provide critical next steps before further interests get compromised. Counsel determines if sufficient legal grounds exist for dissolution or forced buyouts per Partnership Act statutes.

They also initiate crucial evidence gathering. Keep detailed records of all contracts entered, funds spent from corporate accounts, interactions with staff, lenders, or subcontractors, and other decision impacts since the shift in oversight.

Additionally, business attorneys issue demand letters to the offending partner, putting them formally on notice for breach of duties and contractual obligations. Sometimes legal implicit threats sow seeds for a truce.

Protect Personal and Business Interests

While awaiting the offending partner’s response to demand letters, take proactive measures to secure your interests:

Operational Interests

Inform all key staff, contractors, and subcontractors not to accept directives from your partner unless you confirm joint agreement on decisions. Ensure the chain of command recognizes you retain ultimate decision authority.

Also, change passwords, credentials, and access codes on vendor accounts that may have been transitioned without proper approval in order to regain control of account access.

Strategic Interests

Carefully weigh the pros and cons of soliciting explicit support from key investors, board members, advisors, or influential business partners regarding your concerns about mismanagement or misconduct. Their influence behind the scenes could nudge attitudes in a more constructive direction.

Legal Interests

Thoroughly document all correspondence surrounding the dispute, including emails, texts, and calls, to establish a clear timeline of events should litigation emerge down the road. Closely track any demonstrably false representations your partner communicates to key stakeholders about company finances, operations, or leadership issues in order to capture potential evidence of improper conduct.

Protecting critical business and personal interests during times of partnership turmoil establishes stability amidst chaos. By securing assets and operations, you reinforce infrastructure to weather partnership disputes and any transitions constructively. With safeguards in place, you can turn attention to resolving matters strategically, backed by evidence and leverage.

When to Walk Away from a Business Partnership

Despite best efforts at communication, governance, and conflict resolution, some partnerships turn too toxic to be salvaged.

Red flags indicating the relationship has reached a point where splitting up may be healthiest include:

  • Persistent denial of impropriety, violations of agreements, or unethical actions in the face of clear evidence. Refusal to take accountability makes rebuilding trust impossible.
  • Allowing damage to the company, employees, customers, vendors, or other stakeholders to escalate during attempts at dispute resolution. Harming operations while partners argue crosses an ethical line.
  • Half-heartedly going through the motions of mediation without genuinely committing to the process. Stubbornness, resentment, and power plays prevent collaboratively solving issues.
  • Stonewalling conversations regarding fair valuation and buyout terms for separation. Unwillingness to explore ending involvement typically signals a desire to wrest control or inflict harm.

If most or all of these scenarios describe your situation, seriously consider consulting attorneys on dissolving the legal entity encumbering the damaged partnership. Clients and employees can then launch alternative ventures cleansed of past disagreements and power struggles – unencumbered by broken relationships.

While emotionally draining in the short term, ultimately ending hostile partnerships empowers all parties to redirect energy towards personal growth, healing, and pursuing their entrepreneurial destinies along healthier paths unknown together.

TONG LAW Can Guide You Through Partnership Disputes

Parting ways with a co-founder can feel like going through a bad breakup, but your business is so much more than a mere relationship. Don’t lose sight of your dreams or allow years of effort to unravel disputes that have grown toxic. Leaning on the right business divorce attorney provides objective wisdom so you can make strategic decisions, protect your interests, and emerge stronger.

TONG LAW is experienced in conflict resolution, partnership agreements, equity splits, and the intricacies of winding down or salvaging alliances equitably. If your partnership reached an impasse, don’t wait until time invested together clouds logic. Contact us now so we can start mapping the smoothest path forward or building proactive structures aligned with your vision.

Author Bio

Vincent Tong

Vincent Tong is the CEO and Managing Partner of TONG LAW, a business and employment law firm located in Oakland, CA. Vincent is a fierce advocate for employees facing discrimination and wrongful termination. With several successful jury trial victories and favorable settlements, he has earned a strong reputation for delivering exceptional results for his clients.

In addition, Vincent provides invaluable counsel to businesses, guiding them on critical matters such as formation and governance, regulatory compliance, and protection of intellectual property assets. His depth of experience allows him to anticipate risks, devise strategies to avoid legal pitfalls, and empower clients to pursue their goals confidently.

Vincent currently serves as the 2021 President of the Board of Directors for the Alameda County Bar Association and sits on the Executive Board for the California Employment Lawyers Association. Recognized for outstanding skills and client dedication, he has consecutively earned the Super Lawyers’ Rising Star honor since 2015, reserved for the top 2.5% of attorneys. He also received the Distinguished Service Award for New Attorney from the Alameda County Bar Association in 2016. He is licensed to practice before all California state courts and the United States District Court for the Northern and Central Districts of California.

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