Disputes between the partners of professional service firms have a tendency to be highly personal, with reputations, money and careers at stake.
The breakdown of a business relationship can be particularly difficult to tolerate within a dental practice, where there are several owners working in close proximity to one another.
The tendency for people to quickly take sides in a dispute and also to look for allies is also a factor; the more partners there are, the more internal politics are likely to complicate a resolution. For dentists, that resolution is not as simple as one partner leaving and setting up another practice as there may also be the NHS contract issue to debate as well.
In 15 years of handling shareholder disputes it has been my experience that professions such as dentists, doctors, and solicitors produce the most bitter and unpleasant disputes. This is often complicated by the fact that funding an exit of a partner is often more complicated than funding a company sale.
The reasons for breakdown can be many and varied. Times change and you may no longer believe that a partner within the practice wants the same things that you do; you may not believe your business partner is 'pulling their weight' or there might be a discovery of an event that you regard as an irreparable breach of trust.
Whatever the reason, lawyers are usually brought in when your willingness and ability to communicate degenerate to the point where the relationship collapses.
I always ask if the client really understands the position across a range of issues and their responsibilities. Are you clear about what you really want out of the business and realistic about what you expect from your partners?
Business disputes do not always have to end in an acrimonious divorce. There might be a realisation that roles have been misunderstood, or that you have not grasped how the other party is actually contributing to your shared success. There may even be a reapportionment of the benefits that one party takes from the company.
However, normally people don't just want out, they want to 'win' and for the other side to 'lose'. This attitude can actually lead to both parties refusing to let the other side be seen to win even if it means the failure of the business and financial loss to them.
What is actually required is for the two parties to recognise the situation and understand who is leaving. Once that is agreed it is a matter of negotiating how much the shares that are to be sold are worth.
Human nature dictates that the person buying will want to pay considerably less than the person selling wants to be paid. The quickest and cheapest route for the parties to achieve a successful separation is to enter into a contract to appoint an independent expert to value the shares and to lock both parties into selling and buying those shares.
Alternatively, a cheap way to resolve a dispute would be to have a shareholder agreement in place at the start of your relationship. These can be set up and used like prenuptial agreements – a rule book to assist in the event of a later dispute. An early understanding of the exit route would enable the shareholders and directors to part ways more cheaply, but protect the company from damaging and distracting feuds.