INTHEBLACK November 2021 - Magazine - Page 63
DISPUTES BETWEEN BUSINESS PARTNERS CAN CAUSE
PROBLEMS IN THE WORKPLACE AND EVEN BREAK A BUSINESS
IF NOT MANAGED CORRECTLY, BUT THERE ARE WAYS TO ADDRESS
ISSUES AND MITIGATE THE FALLOUT.
STORY CAMERON COOPER
I
t doesn’t have to end in pistols at dawn every
time there is a falling out in the boardroom.
Disagreements and conflicts between
business partners do happen, and if left
unchecked can spiral from a professional business
disagreement to a more emotional attack.
“It becomes personal,” says Kathleen Vouris CPA,
a partner at Hall Chadwick. “What once was a
business arrangement and relationship becomes
very emotional.”
Vouris says that, if one person feels like the
aggrieved party in a business dispute, they may be
content to throw away everything they’d worked for
just to spite their colleague. “They say, ‘Well, I’d rather
have nothing, just so they have nothing, too’.”
She equates the experience to a bitter marriage
breakup and, just as with ill-fated nuptials, the key to
a better outcome for all parties is to act quickly and
limit the damage.
IGNORE DISPUTES AT YOUR PERIL
The way business disputes are handled can have
serious consequences, financially and emotionally.
Yet Ravi Navaratnam FCPA, chief strategy officer at
engineering consultancy Minconsult in Malaysia, says
leaders often neglect their conflict management skills.
“It’s seen as something that’s remote to the actual
machinations of a company on a daily basis,” he says.
Navaratnam advises three key actions when
seeking to address conflicts – empathise, listen and
decide. In combination, they provide a framework for
negotiations to progress.
“Making a stand or a decision is the end point,” he
says. “But before you arrive at that end point, you have
to understand what’s going on and empathise and
listen to the other side. You have to put yourself in
the shoes of that person.”
He adds that the act of communication is often
confused with true listening – two people may be
engaged in conversation, but if one person is doing
all the talking and the other is just a sounding board,
little headway is likely.
“At the end of the day, you get far more from
listening than you do from talking.”
CUT YOUR LOSSES
An important reason to avoid or limit the damage
from conflicts is the company’s bottom line. Messy
disputes between partners can stall the business or
derail it financially.
Marelda Hibberd, commercial litigation and
insolvency partner at Maddocks, acknowledges that it
often takes a hefty invoice from their lawyers for some
opposing parties to start negotiating properly.
“It starts to get quite real when they get the legal
bills,” she says. “The aim with disputes should be to
get to a position that you can live with rather than
a position you really want.”
If partnership arrangements have no corporate
structures in place, disputes can drag on for years and
become legally onerous and expensive. For that reason,
Hibberd urges partners to define the terms of the
partnership agreement long before any disputes arise,
including a formal buyout plan or dissolution strategy.
Too often, partners inject money into a business
by way of capital or equity, but fail to document this
properly. If one party claims an entitlement at a later
date, there is no paperwork to back up the claim.
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Conflict
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intheblack.com November 2021 63