Business

The prenup for your business partner

Issue

We're friends. Do we really need a long operating agreement?

Rule

Your agreement decides what happens when an owner leaves, dies, divorces, or stops pulling their weight.

Translation

Plan the breakup while you still like each other.

The most important clause in a partnership is often the buy-sell provision. It sets how an owner's share is valued and who can buy it when life happens.

Without one, a partner's spouse, heirs, or creditors can end up in the middle of your company. That is a very awkward board meeting.

Decide the hard questions now: who decides, who can sell, and how the business gets valued.