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How to End a Business Partnership With a Friend

Going into a business with a friend is like alchemy. If the recipe is nice and the ingredients augur well with each other, the thing may just pan out. If not, you risk ruining your friendship and burning the business to the ground. Businesses co-founded by friends have mixed success at best. Some manage to get through their garage-start-up phase. Others aren’t half as lucky and end up breaking up.

As friends, you definitely know and understand each other without words. You have the same interests and preach similar life philosophies. However, a wonderful friendship, even one that has evolved through years of thick and thin, is not necessarily a guarantee of business success.

In his 2012 book, The Founder’s Dilemma, Professor Noam Wasserman noted a correlation in the composition of start-up founding teams. He expressed that groups of friends and relatives are the least likely to stick together, with each social connection increasing the chance of a cofounder leaving the company by 30 percent.

Indeed, that report has proven to be true, as business partnerships between friends or family won’t always be sunshine and rainbows. Even if both of you start with nothing but a positive attitude, the rainy days will definitely come, and how you resolve it will dictate the life span of the business.

These days, the line that separates business and personal life is blurry at best. But when friends decide to invest time and resources into building a company, the line vanishes into thin air. Delicate, personal matters that you normally keep under wraps will show themselves in the office.

After all, your best friend is privy to the things that happen in your personal life, so there’s no point pretending they don’t affect the work. And note that when they do, you are more likely to falter and make poor business decisions.

Once you become bosses of your own company, you will more or less notice a change in the dynamics of your relationship. Almost every work will become a staple in daily conversations. It will filter into chill hours and your buddy won’t be just your buddy anymore.

Have it in mind that it doesn’t necessarily have to be a turn for the worse, but you should consider that possibility in your calculations. Can you take steps to compartmentalize? Are you ready to put your friendship at stake to make the business a priority? What if something goes wrong and you lose both the business and your friend?

A good number of people believe that having a plan B is like preparing to fail before you even start. But the truth is a contingency plan can help preserve your friendship, or at least let you break up in a civilized manner when the business starts flat-lining.

Your exit strategy should detail what will happen to company assets, the percentage each of you gets paid upon separation, and what happens to clients. Are you going to continue on your own or close up shop for good? What happens to the intellectual property after separation?

5 Steps to Ending a Business Partnership With a Friend Without Ruining the Relationship

Agreeably, breaking up can be very challenging, especially for business partners who are also friends. But there are ways to end a business partnership without ruining the relationship. Have it in mind that it takes primarily communication and a lot of understanding, but it can be done.

  1. Note the Signs Before it is Too Late

The loss of faith and desire to end a business does not come overnight. It is known to build up over time, with small signs turning into big red flags. Left unchecked, these little oversights can reach a boiling point, turning the best of relationships into the worst.

Therefore, to avoid that and to help ensure an amicable breakup, you need to spot the signs of your failing business partnership before it reaches a toxic breaking point. One of the more noticeable signs is when your partner’s work habits change. If your business partner suddenly starts slacking off or is not offering the business his or her all, it could be a red flag that something is not right.

Note that nothing turns a business partnership sour quicker than if one person thinks that they are doing all the work while the other is not. Howbeit, to salvage the relationship, keep the dialogue going—that is, listening as well as talking.

Meanwhile, to efficiently preserve your business partnership, consider approaching your partner and seeing if something is up. Note that if you leave this sign alone, it could make things a lot worse when you do decide to dissolve the business. By that point, there’s often a lot of pent-up resentment and frustration.

Another tell-tale sign the business partnership is becoming unfavorable is if you and your partner find yourselves in heated arguments about the direction of the organization. Yes, debating is ideal for business success, but unresolved conflicts can make it much harder to sell a business, which is why it is necessary not to let things like that fester—especially if you care about remaining friends.

  1. Always Make a Fast, Clear, and Decisive Break

Note that just like bad marriages can take time to dissolve, the same can be said about a business partnership. However, never ignore tensions, disputes, and outright arguments, or brush it off as too much time spent together. You may feel that your bickering is healthy, but if it goes on for a long time, it can negatively affect your relationship as friends and as business partners. That is why it is important to make a clean and quick break.

Try not to spend months debating if you should remain business partners or if the business should be sold or one partner buys the other one out. When you reach the point of no return, you must eradicate any feelings of hurt, frustration, and resentment while trying to dissolve the business.

Have it in mind that breaking up with a business partner is emotional and can even be tougher than a divorce. But it is very crucial not to let negative feelings come into discussions. The last thing you want to do is attack your business partner and expect to spend the holidays together later in the year.

  1. Ensure a Healthy Dialogue

Once a business partnership goes sour, it is more or less the result of a breakdown in communication between the partners. Nonetheless, to salvage the relationship, keep the dialogue healthy and going—that is, listening as well as talking.

When resentment and anger have poisoned the friendship, it is quite daunting to hear what the other person is saying. But truly listening and continuing the dialogue through the entire process can go a long way in preserving the friendship.

However, to avoid miscommunication, be explicit about what you want from the breakup process. If staying friends is the most important goal, communicate that. If making the most money off the business is the objective that needs to be communicated as well.

  1. Be Reasonable

If you intend to maintain a friendship once your business partnership is over, it is going to require both parties to be reasonable in understanding the best possible way to walk away. Without that and the willingness to compromise, you are more or less likely to say goodbye to the relationship and hello to a contentious, and perhaps ugly, breakup.

Note that this may require giving up a little more than you wanted, but the goal is to ultimately let go and move on as quickly as possible while keeping the friendship intact. If the process is long and drawn out with quibbles over every detail, it may mean the end of your relationship in addition to that of the business.

  1. Seek the Help of Experts

Always remember that even the best negotiations require a third party. For two partners who want to sustain their friendship, seeking help from an independent expert can go a long way in achieving that goal. Have it in mind that a person without a stake in the business can provide objective advice, which can help limit arguments and resentment. (Even calling in help when the relationship is souring can help prevent irreparable damage in the future).

Howbeit, when seeking outside help, choosing someone both partners can trust is important. Consider contacting a business mediator, business coach, or accountant, but try not to contact a lawyer. Because as soon as you do that, your partner may take that as a signal that your relationship is over.


Ending a partnership business can be difficult, especially if your partner is also a friend. There are good and bad ways to handle dissolving the business while preserving your friendship. To cushion some of the blow and preserve the friendship, make sure you are communicating throughout the process. That requires talking a lot, recognizing that it is emotional without letting those emotions get in the way, and being reasonable in the negotiations.