San Luis Obispo Attorneys Release the Report ‘Is it Time to Review Your Partnership Agreement?’
-Ideally, partnership agreements are reviewed at set times, such as annually or bi-annually, as defined in the original agreement. There are also other events that meant it’s time review the partnership agreements and the business attorneys from San Luis Obispo’s Toews Law Group, Inc. have recently released some tips to help business partners conduct productive agreement reviews.
Periodic reviews of partnership agreements are the best approach so that the agreements can be kept updated to current condition of the business and to the partners life events that might affect the partnership agreement. Other conditions that may require a review include:
- One partner wants to sell to the other partners: The original partnership agreement should specify how a partner can sell all, or a portion, of shares in the business to other partners. A review of the partnership agreement is good business to make sure that the selling partner’s financial share and personal contribution to the business is accurately defined. If not, these matters might need to be defined before a buy-sell agreement is drawn up and signed.
- A change in business profitability (up or down): Either an increase or decrease in profits affects partners income. Reviewing the partnership agreement make sure that each partner is included in business profit or loss according to the percentage of the business owned.
- A decision to change the direction of the business: All of the partners agree to add new products, or acquire a business that is established in a new direction. Before actually entering into negotiations, review the partnership agreement to be sure about the role each partner plays in changing the business. The San Luis Obispo business attorneys from Toews Law Group, Inc. are experienced in all aspects business that can affect a partnership.
- Existing partners have agreed to explore adding another partner: Does the partnership agreement address how shares of the business will be affected if a new partner is brought in?
- A partner gets divorced or married: Are community property laws going to affect the share of the business in a divorce or death of the partner.
- A partner is considering filing for personal bankruptcy: How is the partner’s share of the business going to be affected by a bankruptcy?
- One or more partners disagree with a business decision or action taken on the part of another partner: Does the partnership agreement provide for protections and recourse?
- To verify partners are being compensated in accordance with taxation laws
Any of these circumstances might require a new agreement and legal advice is always appropriate. The business attorneys at San Luis Obispo’s Toews Law Group, Inc. can meet a range of business legal and consultation needs including assisting in the review of existing partnership agreements and negotiations for revisions. The firm serves as business consultants for debt restructuring, sales, purchases and business reorganizations and other workout situations.
In matters involving partners and partnership agreements, the goal is to reach agreements that are in the best interest of all the partners and the business. Toews Law Group, Inc. is positioned to bring the best possible resolution to partnerships.