Professional Opinion: The Business of Breaking Up a Partnership

*Written anonymously to protect the NOT so innocent.

I remember sitting there, just highlighting, highlighting and highlighting, so many numbers, so many charges, so much money—just gone. When we started the company together, it was thrilling. We were young, ambitious, hungry and starting something with a potential magnitude we didn't know or could even fathom. That’s how a lot of companies start, as an idea, a collaboration. Then all the sudden, you're in it.

The co-founder, business-boss-gal-pals model is popular—see Gilt, Rent the Runway, Birchbox and Proactiv—and it makes sense why. Everyone loves a partner in crime, you can do double the work and have double the fun, and that feeling of not being alone is, well, a good one. Partnering up with a friend can work out amazingly. Or it can not.

Cut to a few years into your business, employees, money and tensions run high, and while you may think your roles are clear as can be, your word means nothing unless it's in writing. Breaking up with a business partner might just be the most painful breakup you can go through—because this one comes with a price tag.

My story is not unique, but when it happened to me it felt like the world was crashing in. It was hard to breathe, difficult to believe that someone I trusted, and even cared about, could be taking money from a company that we had built together from the ground up. My gut had been telling me for months that something wasn't right, but I assumed it was more a personal issue and that no matter what was going on between us, we were both equally invested in the business.

Wrong. 

It eventually came to light that not only was my partner not managing our finances, but actually manipulating them. This included racking up unrelated business expenses, disregarding all things tax related, and straight up embezzling money. I was devastated, and what was worse, I had no idea what to do next. I felt ashamed and scared to talk about it—I thought it had to be a reflection on me and how I operated a business. It took me a few years and several conversations to get over it, and through it all, I realized that I wasn't alone. One business partner taking advantage of another happens, and it happens a lot. Partnerships split up and morph all the time and for all kinds of reasons. Being able to step back back and realize something isn't working  is a part of being a mature business pro. 

Trusting someone is not a flaw but a positive characteristic.

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The hardest—and yet ultimately most helpful—thing for me to accept was that it was NOT my fault.  Trusting someone is not a flaw but a positive characteristic. It takes trust to build a business, and had I been skeptical and suspicious from day one, we would have never gotten off the ground. Moving on and away from a partner does not have to mean the end of your business, and often, it will actually turn out to be the beginning of something great.

I hope this never happens to you, but if it does, here are my tips for pulling through, and maybe even coming out on top. 

Don’t over react.

When I found out, I wanted to freak out, confront and deal with it head on, but cooler heads prevailed. Take a deep breath, and assess all the details of the situation to 100% ensure you are in the right before initiating a confrontation. 

Get your team in place.  

I was lucky enough to have an incredible lawyer and forensic finance team that helped shape my case and bring to light things I would have overlooked. Beyond that, they were able to deal with the personal communication that I wasn't emotionally prepared to handle.

Handle clients and employees with care.

The business of breaking it to your employees and clients is extremely crucial. I personally called each client to explain that my partner and I were parting ways. I followed up with an email of how the transition would work and assured them we were ready to take on the challenge. When you do all of this, resist the urge to talk bad about your former partner and keep the details of why you're splitting to a minimum. 

Tune out the 'I told you so.'

One of the hardest things was hearing from many friends, family, business contacts and clients who swore that “they saw this coming.” I acknowledged that they meant well, but just tuned it out. Beating myself up wasn't going to help me move forward, and I had to focus on what was right in front of me. 

Revise and Renew.

As roles and responsibilities change in your partnership, update your operating agreement. Even when everything is smooth sailing, it is crucial to know who is in charge of what.

Move on and UP.

I was nervous about keeping the same business name and dealing with the "How is so and so?" questions, but it gets easier and YOU get better. When someone asks a question about the past, politely change the subject to something in the future that you're really excited about.

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