The price of partnership splits
Published: 11 September, 2009
MANCHESTER: The split of rock band Oasis shows how merchant businesses, even successful ones, operating as a partnership can break up leaving once close working relationships in tatters, said north west law firm, Mace & Jones.
Ian Hodgkinson at the firm's partnership unit said: "Understandably families tend to trust each other but as Oasis has so graphically shown the pressures of working together can sour even the closest family relationship. In Oasis' case the brothers couldn't put aside their differences despite their commercial success and this is frequently the case when partnerships split."
To prevent a potentially costly, drawn out and complicated partnership break up it is vital to set up a legally drafted partnership agreement, Hodgkinson said.
"The agreement is the partnership's roadmap - it gives it a constitution," he said. "This ensures that if the business partners fall out there is a clear structure for splitting the assets of the business. This includes intellectual property, the business name, property and any future earnings. Without a partnership agreement winding up the firm can become an acrimonious 'free for all'. For example, individual partners may attempt to hijack customer lists and contacts and even the name of the partnership. This can lead to lawyers becoming involved at a very early stage and court injunctions being sought to bring order to the process."
A properly drawn partnership agreement will try to address much of what is found, in the case of a limited company, within articles of association and shareholder agreements, he said.