Updated November 19, 2020:

If knowing how to end a business partnership with a friend without ruining the friendship is important to you, do the following:

  1. Spot signs of trouble before it's too late.
  2. Make a clean break.
  3. Continue your dialogue.
  4. Have reasonable expectations.
  5. Call in expert negotiators if necessary.

How to Break Up a Business Partnership With a Friend

First, know how to spot signs of trouble. Usually, the decision to end a partnership isn't made suddenly. Small things can turn into red flags over time. If you don't tend to the trouble, things may reach a boiling point, and your friendship could be in jeopardy.

To make the breakup as amicable as possible, spot signs of a failing business partnership before it reaches a toxic level. One thing you'll probably notice is that your partner isn't pulling his weight. He might slack off or stop giving the business his all. Few things can sour a partnership quicker than one person thinking she's doing all the work, particularly when the so-called slacker is still reaping benefits.

Approach your partner to see if something is going on. If you don't do something about this as soon as you suspect trouble, things could get much worse. By the time you dissolve the partnership, you may have a lot of pent-up frustration and resentment.

Another sign of trouble is you and your partner having heated arguments about the business. While healthy debates are fine, having unresolved conflicts can make it hard to sell the business. If you care about staying friends, don't let problems fester.

Clean Breaks and Communication

If you do decide to split, make it a clean break. Business partnerships that go south are similar to failing marriages. Don't dismiss disputes, rising tensions, and outright arguments as just spending too much time together. You might think bickering is part of a healthy, successful business partnership, but if it continues, your business relationship and friendship could both end.

Clean, quick breaks are best, so don't spend months debating the following:

  • If you should sell the business.
  • If one of you should buy the other out.
  • If you should stay partners.

When you decide to end the partnership, you must put aside any hard feelings while you dissolve the business. It can be an emotional time but don't allow negative feelings to enter into discussions. You don't want to ruin your personal relationship with your partner.

In many cases, business partnerships go sour after the partners have a breakdown in communication. To salvage the relationship, it's important to keep the dialogue going. Talk, but listen, too.

It's not easy to hear what your partner is saying if you're resentful and angry. Truly listening and communicating throughout the dissolution of the partnership may preserve your friendship. Be clear about what you want to minimize miscommunication. Make it clear what your main goals are, whether it's staying friends or making the most money possible from the partnership.

The Importance of Compromise

If you want to remain friends once the partnership ends, both parties have to be reasonable and willing to compromise. Otherwise, the breakup — of the business and the friendship — could get ugly. You may have to give up a little more than you want, but remember that your goal is to make a clean break while remaining friends. A long, drawn-out process with many disputes over little details could end your professional and personal relationships.

You may have to call in an expert if your negotiations need a third party. For partners who want to stay friends, getting advice from an independent expert can be a big help. An unbiased party can be objective, limiting arguments and resentment. Choose someone who both parties trust, such as the following:

Avoid retaining a lawyer, if possible, because your partner may see that as a sign the relationship is over. Continue communicating with your partner throughout the process, while not letting your emotions get in the way of negotiations.

Ending a partnership business can be difficult, especially if your partner is also a friend. There are good and bad ways to handle dissolving the business while preserving your friendship.

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