As if growing and maintaining a business isn’t challenging enough, successful construction enterprises also require business partners to work together to maintain a strong relationship. As we discussed in the last part, when there are disagreements about growth strategy, financial disputes, or breach of contract, these precarious situations can lead to a dispute that dissolves a business or at least a partnership. In the second part of this article, a Tampa construction lawyer will discuss ways business owners can be proactive and prevent disagreements from occurring.
Performing a Background Check
Before you enter any agreement with another entity, the first step is to perform your due diligence. This begins with performing a background check, seeking referrals, and ensuring your potential business partner isn’t currently involved in a lawsuit.
For existing businesses you are looking to merge with or acquire, there should be no issues with them refusing to open up their accounting books or show you company records for your review. Moreover, they should also have no issue with allowing you to speak with the current staff or tour their facility.
Developing a Plan
After you perform the above tasks, sit down with your potential business partner and outline a specific strategy for the future of your operations. This includes everything from determining management decisions to the financial aspects of your company to contractual obligations to a succession plan and buyout rights. Before you agree to a partnership, it’s critical that both parties have a clear understanding of the agreement and are willing to share these responsibilities equally. You should include attorneys in these discussions as they will have an in-depth understanding of the laws related to these issues. It’s especially critical for construction businesses to work with Tampa construction lawyers that understand the complexities of the construction industry.
Put the Plan in Writing
After you and your potential business partner have established ground rules for your partnership, it’s time to put all of these principles into writing. The contract should stipulate each partner’s role and responsibilities, including what aspects of the business they control and their financial responsibilities for the business and their compensation. Moreover, the contract needs to define how the business will make important management decisions and how a dispute between business partners will be handled.
Lastly, the contract should focus on how ownership shares would be impacted if an existing partner left or was removed from their role, or if a new partner joined the business. Even during the formation of a business, owners should consider potential exit strategies and define under what circumstances a partner can end their agreement or be terminated from their role with the company.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.