From our offices in Miami, we serve clients throughout Florida.

2 owners, 1 problem: Tips for business dispute resolution

It is not uncommon for owners to disagree about business strategy. In some cases, they may be able to come to a resolution on their own, in others the owners may require aid reaching a resolution. In these situations, the following options may help:

Option #1: Mediation

Mediation is a process that involves both owners taking their dispute before a mediator. The mediator will guide negotiations between both owners with a goal towards reaching an amicable resolution. It is important to note that the mediator does not have the power to impose the resolution. Both parties must agree to the proposal in order for mediation to result in a successful resolution.

Option #2: Arbitration

Arbitration also involves both parties taking their dispute before a third party, but in this situation, the arbitrator has the ability to enforce the resolution. This is because the owners agree to empower the arbitrator with the ability to issue a final resolution.

Although it will result in a resolution, it is important to move forward with arbitration carefully. Ideally, look for an arbitrator that has experience in a similar area of business. This may help to better ensure the arbitrator develops a fair resolution.

Option #3: Business divorce

If a resolution is not possible, one owner may consider forcing the other to withdrawal from the business. This process, often referred to as a business divorce, is generally guided by provisions within the business’ documents. Examples include a business plan, by-laws, or operating agreement. Although not ideal, a business divorce is still often a more favorable option compared to dissolution of the business.

If the owners choose to dissolve the business, it is important to do so carefully. Federal and state laws and regulations may apply, and a failure to abide by these rules could result in additional headaches.

Share This