When you decided to start a company with someone else, forming a partnership made perfect sense. The two of you had protection through mutual ownership and influence over the company’s direction. However, relationships and business markets change, and businesses generally need to adapt or risk failing.
Whether things no longer work well between you and your business partner or one of you now wants to move on to a different opportunity, you may need to dissolve your partnership. At that time, if one of the partners wants to continue operating the company, they may choose to change the business’s structure rather than to start an entirely new company. Doing so will require careful planning and specific legal paperwork.
Why preserve the existing organization?
Although you can always attempt to build a business again after achieving success once, there’s never any guarantee that you will achieve your prior success. Completely dissolving not just your partnership but also your company might mean ending your relationship with your suppliers, your landlord and your employees. Rebuilding after completely closing down the company can be quite difficult.
There’s also real value in your established operational history and brand reputation. You can potentially keep the business name and all of its resources when your partner leaves the company. Doing so simply requires careful planning and appropriate paperwork executed by both former partners.
You may choose to create a limited liability corporation or a larger corporation. You might even decide to take out a new partner and create a new partnership. Re-evaluating the right organizational form for your company is something that benefits you and the business during times of significant change.