Navigating the Fallout: What to Do When You and Your Business Partner Fall Out


Starting a business with a partner can be an exciting and promising venture. However, as with any partnership, conflicts can arise, leading to strained relationships and potential fallout. Disagreements, differences in vision, or financial disputes are some of the common reasons for rifts between business partners. If this occurs, it’s essential to handle it with maturity and professionalism to protect both the business and your personal well-being. In this article, we’ll explore some practical steps to take when you and your business partner experience a falling out.

Communicate Openly

Effective communication is the foundation of resolving any conflict. If you and your business partner are experiencing tension, set aside time to have an open and honest conversation. Avoid confrontation or blame games and instead focus on active listening and expressing your concerns calmly. Acknowledge each other’s feelings and perspectives, seeking to understand the root causes of the dispute. This can lay the groundwork for finding a resolution that satisfies both parties.

Call in help to find a resolution

If direct communication fails to yield results, consider involving a neutral third party, such as a mediator or business consultant. A mediator can help facilitate discussions and guide both of you towards finding common ground. The mediator’s impartiality can lead to fresh insights and creative solutions that may not have been apparent before. This approach can be especially beneficial if emotions are running high, making it difficult for you and your partner to see eye-to-eye.

Review the Partnership Agreement / Shareholders Agreement / Constitution

When forming your business, it’s wise to have a comprehensive agreement in place. This document might be called a Partnership Agreement, Shareholders Agreement or something else. It should outline the roles, responsibilities and expectations of each partner, as well as the steps to be taken in case of a dispute or falling out. Revisit your agreement to determine how to handle the current situation. If you need help understanding the agreement, contact a business lawyer to ensure that you are protected during the resolution process.

Consider Mediation or Arbitration

If direct negotiation and mediation do not lead to a resolution, consider exploring formal mediation or arbitration services. These processes can be legally binding and can provide a structured environment to settle disagreements. Mediation and arbitration can save time and money compared to taking the issue to court, and they offer a less adversarial setting to address the problem.

Assess Your Priorities

During a falling out with a business partner, it’s crucial to assess your priorities and long-term objectives. Consider the potential outcomes of resolving the conflict or deciding to part ways. Ask yourself important questions such as, “Is this dispute impacting the success of the business?” or “Can we continue working together effectively?” Weigh the pros and cons to make a well-informed decision.

Plan for an Exit Strategy

If reconciliation is not possible or in the best interest of the business, it may be time to consider an exit strategy. Exiting a partnership can be complex, involving legal and financial considerations. 

Our business lawyers specialise in this stuff. Seek professional advice to determine the best course of action for both parties and the business’s continuity.

Maintain Professionalism

Throughout the process of resolving a falling out, maintain professionalism at all times. Avoid making emotional or impulsive decisions that could harm your business’s reputation or cause further damage. Remember that your actions during this challenging time can have long-lasting consequences.


Experiencing a falling out with your business partner is undoubtedly a challenging situation. However, it’s essential to approach the matter with a level head, open communication, and a willingness to find common ground. Whether you decide to reconcile or part ways, handling the situation with professionalism and integrity will be critical for your personal well-being and the success of your business. Remember, challenges can be opportunities for growth and learning, both in business and in life.

Need further information or assistance? Give our business lawyers a call. 

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