0:01 [music] and where are you going? What do you want? [music] Hello and welcome to People Making Money. [laughter] Forgot what show I was doing for a moment. Uh my name is Kevin Bemel. I'm your host and I'm here every Wednesday at 10:00 a.m. Pacific time to talk about job hunting, um, starting and running a business and building wealth. So, the whole financial
0:36 side of our lives. And today, this is kind of a follow on topic to last week when I talked about zombie employees and uh, partners. uh [laughter] not not the kind that you that you see in you know horror movies, the the the kind who sort of check out without actually quitting. Um so today I'm going to talk about um breaking up um uh a a breaking up a a business uh partnership
1:12 with a friend. And uh so I I I've talked to a lot of people about this over the years and um you know one group seems to fall into the camp of you know never do business with friends and family. Uh and I I I have to say I I just I couldn't disagree with that philosophy more. And the reason is that we we should have or we should want to
1:47 have um a good solid friend relationship with our business partners. If if we find that troubling because somehow we can't I don't know be tough enough with them or uh we think we'll be taken advantage of by them. the the problem lies with us, not with not with the people, not with the other people or with the concept of
2:26 being in business with a friend or family member or or even both. So, I I know for myself um I have a longtime friend from college. Um, we talked for decades about doing something together in in in a in a terms of a business and and now we are and it's great. Do we always see it eye to eye? No. No, for sure we don't. And and by the way,
3:01 that's a good thing. What we do have is literally decades of friendship behind us in order to know how best to work through the disagreements. Right? So when I get off track, my friend tells me he's like, "Kev, [laughter] kind of screw your head back on correctly now." And you know, we can go on from there. And I can say, Dell, I I I think you're wrapped up in something here. It's not
3:37 productive. And really, brother, got to just drop it. Let's let's let's move on and do something more productive. Uh and and and Dell is not the only friend uh with whom I do business. I talk about my friend Bill, I think, pretty regularly, especially on my show Trust and Estates Weekly because we work together on a lot of projects um with respect to probate administration. And [clears throat] again, do we agree on things all the time? No, for sure
4:13 not. Again, that's part of the beauty of having a a good, you know, partner. We're not strictly partners in the sense of um co-owning a business, but we work very very closely together. It's it's almost almost a partnership in that sense. I've done projects with my friend Rick. Same thing. Okay. And at one [clears throat] time I employed both my mother and father who at the time had been divorced for a long time as well as my older sister. and I was happy to be able to do it and
4:51 I thought, you know, we it was it worked out great. So, hang on one second. I just noticed for some reason it didn't doesn't want to change the title crawl. Okay, there we go. Sorry about that. Uh so [clears throat] I you know that we're in business with friends or family members for that matter doesn't mean that we, you know, that we're we're
5:27 inevitably going to [snorts] get into some kind of irresolvable dispute or that we're going to lose the friendship. Uh quite to the contrary uh I would argue that we should not be acting in business in a way that harms or alienates other alienates other people. So we need to act ethically. We need to be polite, well-mannered, however you might put that. Um you know, we shouldn't be screaming at at
6:03 colleagues and co-workers and partners. None of that is appropriate behavior. And and so there's no reason that in inherent to being in a partnership with a friend that um that that has to that inevitably means, you know, a problem for the business or the end of the friendship. Having said that, just like with any business, there are times when a partnership is is not going to work out. There may be irre ir irreconcilable differences of opinion on a particular
6:39 issue [snorts] and that's okay. Sometimes when we start on a venture we do so with the best of intentions and then as it develops it grows. It changes. All right, it didn't work out. So now we have to be able to move on. Now, when there's not a friendship at stake, it it seemingly um it is easier uh because there may not be any intention on the part of either party to maintain any kind of
7:14 relationship or contact after the business breaks up. Okay. I mean, kind of not optimal. Uh better to maintain relationships than not. Um although in my business career there have been situations with I'm I'm thinking of one in particular longtime client of mine. It's just, you know, when the when the business relationship started to not work well um for various reasons in in the end, you know, we we we broke up our business relationship
7:51 and and then periodic he would call me for, you know, free services basically. And I finally said to him, I said, "No, sorry. Not going to do this anymore." I mean, [laughter] you know, not going to do this anymore. you know it it was in the end it was your choice to terminate the relationship the business relationship and you don't have a call on me for free services as a result right so uh so you know sometimes they don't um now in this case this was not someone that I was friends with in in the sense of someone I socialized with or had an
8:28 interpersonal relationship we were certainly friendly with each other we actually shared uh office space. I I rented office space from them. But uh you know that f for me I I I find that a little bit disappointing. Um it turns out he wasn't really the person I thought he was. But okay, that happens. I've I've made lots of misjudgments. But in in the the current situations in which I'm in in formally in business with a friend or in um I should say in a
9:05 formal partnership with a friend or where I have a you know close business relationship with with a friend. Um I I I I would be I think very minimally sad, upset if if um these if these broke up in a way that uh that that damaged the friendship. I I I'll add one thing and in and it's kind of a preliminary remark because I have some specific uh thoughts that I want to share on on how to affect a breakup u how to in a way that maintains the friendship. I
9:42 strive to have friendships with my closest business associates. So I I think that's desirable. I find that it makes doing business easier, certainly more enjoyable, even fun. So, I have a business relationship with a lawyer by the name of uh Leo Dubos. Um he's actually going to be a guest on my show, Trust and Estates Weekly. Sometime in the next few weeks, we're going to be recording session with him. Leo's a card [laughter] like you know sometimes like I'm having
10:18 a bad day and he's like he'll he'll he'll tell me a joke so it'll cheer me up. You last week I returned the favor [laughter] but he didn't realize at first I was telling a joke. It was kind of like I told a joke and there was a beat and then he realized oh this is a joke, right? It's it's fun to do that kind of stuff. I mean it it breaks up the business day. So, and you know you jokes, you know, we have to be careful with jokes these days. Not everybody finds the same things funny. But if we have a friendship with a business associate, so you know, they they'll understand the spirit in which the joke
10:54 was was uh told and um even if it wouldn't be something that normally [laughter] they would find funny, they'll realize, oh, you know, Kevin's doing this to, you know, lighten up my day a little bit. So now maybe I'll tell the joke I told Leo at the end of the show. So I I I think that it's important to have good strong relationships and you might even start out in a partnership with someone where you're not friends but over the years you become friends, right? And so now that issue it wasn't
11:30 even part of the original concept of the business but now here it is, right? And so then you're faced with, okay, well, you know, for various reasons, the business um maybe the business is just not going well and and it has to be shut down. Maybe uh maybe you've decided this just isn't what you know you want to be doing. and and so uh you know you're you're you have to tell your partner hey your partner and friend you know this is I'm I'm I need to take another direction with my life. Okay so it could be for
12:06 various reasons but but the stakes at least seem to be higher when we're breaking up a business with a friend as opposed to someone who's with whom we don't have that kind of interpersonal relationship. So, um, like I said, I have a I have a few thoughts I want to share with you on this topic to hopefully, uh, make such a breakup go more smoothly. So, let's let's let's talk about first of all, um, why such breakups with friends are uniquely hard
12:41 or at least appear uniquely hard. [snorts] And and I think the first one is that an emotional history can cloud business judgment, right? So if you're in a partnership with a friend and you've decided you want to take another direction, that friend may feel betrayed. Wait a minute, you're my friend and and we're doing this thing and how can you not want to be a part of it? Right? And whereas something like that wouldn't necessarily be as intensely felt if the person uh you know if the people were not friends.
13:18 So uh so so that's that's certainly one aspect as well. There just oftentimes is some kind of emotional baggage between friends. Now, I will say that if you're going to go into a business with a friend, it's it's wise to, you know, deal with any emotional baggage upfront so that that's not hanging over the partnership, right? So, I tend to have friends where, you know, we're we're pretty candid with each other um in the
13:53 moment. So, if I do something boneheaded, my friend Rick is he's not going to say, "You did something boneheaded, Kevin. He's too polite to say that." He's gonna be like, you know, he's gonna like, "Yeah, don't do that. That's right." That's when I know I've done something that that, you know, Rick doesn't like. Don't do that. He'll say to me, "Just don't do that." Or, "You cannot do that." You [laughter] know, and that's good, by the way. Oh, oh, whoops. you know, and you know, we're we're actually in a business situation right now um with a third party and frankly the third party
14:29 drives me absolutely insane, [laughter] right? And uh I finally had to be quite stern with him uh in an email and I was concerned because I didn't clear it with Rick first and and I was concerned that he would he would be upset by that that you know what are you doing potentially damaging you know this situation but he sent me an email just directly to me and he said thank you. Right. So, the other thing is is, you know, that's one of the good things about dealing with friends
15:04 is again, he knew what my intentions were. He knew that I'm I did what I did in order to help. Um, and unbeknownst to me, he had had several uh run-ins with the same uh client and uh so he felt like finally, you know, got a little bit of support from the cavalry, right? So, so but but it's it's you know look it's it's never good to carry emotional baggage with friends and family members. Um but we do sometimes and that can that can sort of rear its head at the time
15:41 where you know a business is breaking up. So [snorts] another problem is is that often times when friends go into business they do so it's very informal. the expectations are unclear, the the shares of ownership are unclear, all kinds of things like that. And this is a real problem. Okay. So, in a in a business with a friend, it has to be those kinds of things need to be dealt with in a business-like fashion. It's a burden on the friendship
16:16 to just assume that they'll work themselves out. So there should be a formal entity created. If you're going to create an LLC, it should be created and and which roles people have should be defined. Ownership percentages should be defined. There should be an operating agreement that specifies those things. So in the venture with my friend Dell, we did all that, right? It's it's easy enough to do, especially these days for crying out loud. You can go on, you know, chat GPT and say, you know, write me a basic operating agreement for a
16:52 California LLC or whatever state you're in. It's going to give you something pretty good. And then you could run it by your lawyer, you know, done, right? So, it it's easier than ever to do these things and they should be done. And they should be done at the beginning of starting a business venture with a friend or without a friend. That makes no difference. Uh because if the business does have to break up, just like in a business that where the owners are not friends, how the business is going to break up
17:27 will be largely specified in those documents. And so it will reduce the chances that there's, you know, bad feelings, arguments, etc., etc. [snorts] So another aspect, and I I mentioned this already, is there's the fear of losing the friendship. Um and and so uh sometimes people feel that, you know, if there's hard decisions that need to be made, they they um put off doing so um because they're afraid of potentially damaging the friendship. And so this is
18:03 where having a a a mature not necessarily long time in the sense of mature but mature in in the sense of emotionally mature relationship is important. Friends need to be able to communicate with each other freely [snorts] and not feel like they can't say something because it might damage the friendship. If if you have that concern when you're starting discussions about going into business with a friend, that needs to be dealt with then to make sure it doesn't rear its ugly head once
18:41 the business is up and running.
18:43 >> [snorts]
18:44 >> So conflict avoidance whether between friends, family members, non-friend and family members is almost always bad for a business because it can mean that important decisions are not discussed. They're not made. Okay? And and that will delay the progress of of the enterprise and that's never good for a business. Okay? So, uh, you know, in the absence of handling business matters in a business-like way,
19:20 that's actually what makes breaking up with a friend uniquely hard because then some of these other issues become potentially more difficult. Okay, so that's that's that's number one. Uh, [snorts] so if if you're in a business with with or without a friend. Okay. So, you need to spot the early warning signs of a problem. Okay. Now, by the way, this is true in any business. Okay. But
19:55 it it may loom a little larger in a business with a friend uh because they have friends tend to rely on each other. You know, the the term these days is have each other's backs.
20:09 >> [laughter]
20:10 >> So there's there's got to be a joke there somewhere, right? Uh but uh you know, if there's something going on and one friend in the business doesn't see it, but the other friend does, right? So the one who's not seeing it is relying on his friend to say, "Hey, have you noticed this thing going on?" Right? So there's got to be a lot of communication. Okay? And that's that's almost o almost always the solution. and and in fact uh I I would say you know air to the side of overcommunicating
20:47 rather than undercommunicating especially if you're in an enterprise with a friend. Okay. So sometimes you know these early warning signs it could be one of the partners feels like he's carrying more of the responsibility than another right [snorts] and and I I talk about this with the various uh you know groups and such with whom I work that because almost all of them are small right and so there there is an expectation that we're going to back each other up.
21:23 We have to be able to do that and we have to be able to ask for that. So, I was in a meeting yesterday. Uh it's a weekly staff meeting I have for a a company I administrate as an asset to a probate and I I I was having a really tough day [laughter] and I finally said to the group, I said, I I just I I'm I'm struggling a little bit today. I I need I just need some grace from you on this uh you know on some of these issues, right? And they were happy to do it. I
21:59 think in large part because I've made a point of saying I'm I'm I'm here for you too and I have backed them up hopefully I think many times and so uh you know that that I needed to ask them for their support uh to to to carry a little bit more of the burden yesterday than maybe I otherwise um you know would have wanted them to carry. uh you know I I I think actually they were appreciative because it also makes it easier for them uh to
22:35 to um to ask me or you know to sort of rely on me and feel like that's okay you know um you know I'm not I'm not unduly burdening Kevin or at least if I am I'm going to pick up the slack for Kevin at some other time something like that. Okay. But [snorts] um when it's friends, there's there's maybe an unspoken expectation that that will be the case. And if if one of the friends starts sensing or feeling that way, so it needs to be articulated. Hey, is is something
23:10 going on? I I I feel like you're not as engaged as as as you have been. And look, I'm I'm happy to pick up the slack if something's going on, but but tell me tell me, let's cuz you know, let's let's work this out together. Does it we have a friendship and a business together? And and and by the way, I I find as a general policy, if things are going wrong in one of my colleagues personal lives, so it's going to impact the business. And so I'm I want to engage and help them if I
23:46 can. Um even if it's just letting them know that, hey, I'm I'm I'm sorry to hear you're having troubles in your personal life. Uh, but you know, just know that I I'm I I appreciate you you telling me what's going on so that I know that, you know, so that I know what's going on and and can, you know, maybe reorganize things on the business side a little bit so you can, you know, deal with what's going on in your personal life. I I think that's how things should work in business
24:21 generally speaking, right? uh another another sort of early warning sign issue of a problem is avoidance of uh dealing with money issues. Right? So um you know just like in any business monetary issues need to be discussed and they [snorts] need to be discussed when they need to be discussed. Avoiding them is just pushing a problem down the road. And most of the time real problems don't get better with lack of attention. Okay. And
24:58 the flip side is is that sometimes people who have uh you know an interpersonal and emotional relationship find it hard to talk about money especially if there's some sort of monetary imbalance. And it's incumbent on the friend on friends who are in business to be open about such things and to be able to speak about them without uh a sense of um entitlement, a sense of kind of superiority. Um you know the these these need to be
25:33 worked out. So, I I'm in a new venture right now with a partner and this this is something that we've been trying to figure out how we're how we're going to handle this thing, right? Uh and um we haven't quite we haven't quite figured it out yet and that's okay. The venture is relatively new. Uh but I you know I think we will with time. I'm I'm I'm actually pretty sure we will with time. And you know, problems don't have to be resolved or I shouldn't even this isn't really even a problem, but issues don't have to be resolved
26:08 uh you know, right away. As long as there's at least an ongoing discussion, an ongoing recognition that there is, you know, there is an issue here, it needs to be dealt with, that's fine. But avoiding the issue can create tension. Okay. And that can that serves as an early warning sign that there's a problem between friends in an enterprise. [snorts] Um, finally, um, there there can be a tendency for in the absence of candid conversations, and by
26:45 the way, when I use the word cander, I mean just being upfront about what one thinks and feels about any particular issue, but not um, you know, confrontational and vulgar. Cander is different than those things. I think there's a tendency to um mistake cander with this kind of truth where you're clubbing the person on the on the head, you know, with the truth. Not a good thing. Okay. But but we do need to be upfront uh in in discussing issues. And if we're
27:21 not, sometimes resentment replaces that that candid communication because one party thinks that, you know, he can't talk to the other one about a particular issue, be it money or some kind of business problem or whatever. And so if you start to feel resentment between, you know, between you and a friend when you're in a business, that that is an early warning sign. Okay, let's take a quick break and we'll be back for more.
27:48 >> [snorts]
27:50 >> When life brings unexpected changes, managing inherited property shouldn't add to your stress. Magnum Properties specializes in probate and trust real estate management. We handle the complexities while you focus on what matters most. From property maintenance to tenant relations, from legal compliance to maximizing value, we're your trusted partner through every step. Magnum Properties, Inc. Turning property challenges into peace of mind. Call us today at 2132644396
28:28 or visit magnumprops.com. Okay. So the [clears throat] next uh issue is um essentially separating the friendship from the business. Okay, they're they are two distinct entities, if you will. Okay, now when you're in business with a friend, obviously there's some meshing of the two. Okay, hopefully a good meshing of the two, but they're still separate. Okay. And they should be
29:05 viewed as such so that [clears throat] what happens with the business with the with the business doesn't automatically uh sort of attach to the friendship itself. So I know uh this is many many years ago now back when I had my real estate company. um a college friend and I um went into a real estate investment essentially together and unfortunately it just didn't work out the way we
29:40 thought it would and there was, you know, some significant money lost there. So, [clears throat] you know, I remember at one point my friend calling me up and saying, you know, hey, want to have a talk with you about what's going on. I'm like, "Okay." And and and I, by the way, I felt responsible for the venture not working out. And I was I was embarrassed. Um I I was um I was very embarrassed. And and frankly, I wasn't handling the situation. I wasn't handling that aspect
30:17 of the situation very well. And my friend Malcolm said to me, "Hey, you know, we have we have a yearslong friendship here." and he said, "However this works out, that has to survive." I thought that was one of the smartest things that I've ever heard, you know, coming from a business associate who again was was was a friend first. And the and you know, in the event Malcolm and I are still friends, you know, what amounts to
30:52 35 almost 40 years later, I think at this point, right? and and you know, first of all, good for Malcolm to to raise the issue, to speak to me about it candidly. Um, and and um, you know, not so good for me that I avoided it and kind of put him in that that place of of of of having to be the one to brooch the subject with me. Okay. So uh you know but but in in the end we were able to
31:27 keep the business venture and the friendship. We recognized they were separate entities and again we you know we remain uh good friends to this day and and I'm I'm very grateful both to I'm very grateful to Malcolm both for the the business lesson he gave me very early on in my business career and for the friendship that we've continued to enjoy for decades later. Right? It's because he recognized that distinction that that that has been the results. So when a business between a business owned
32:04 by friends needs to break up, I think it we need to be careful about how how [clears throat] that's framed. Words do have meanings. I know this sounds so cliche. Words have meanings. Yes. Well, yes they do. How we talk about things is important. Okay. And [clears throat] if we look at the breakup of that partnership by friends uh you know as a personal failure that is far more likely to damage the
32:40 friendship than as we look at it than if we look at it from the standpoint that uh hey this is a this is a structural change that needs to take place here. Whether you know one friend is going to leave the business and the business is going to continue or whether the business is going to close uh you know change happens. It's it's a it's it is a factor of human existence and and and in the end it doesn't do any good to dwell on on so-called personal
33:17 failures. Now, by the way, maybe the reason the business is not working out is that one of the friends just didn't have the skills or the knowledge or the experience that he thought he had. And so maybe he has some responsibility there and a candid conversation about that may be appropriate. But the fact that the two partners because it is it will be the two partners' responsibility that they didn't correctly assess their mutual
33:52 abilities. That's not a personal failure. We we do that sometimes, right? And and and it's, you know, it's got to be left at that. Okay? If if if the friendship is to be is considered important. Okay? So, best to use neutral language, things like this isn't working, the business isn't working, as opposed to, "You're not working. You're letting me down, you're not doing the things you said you
34:27 would do, right? It's so important really always that we be careful about what we say and how we say it. Okay, there's that old expression uh you know we treat people like family. I think there's some restaurant that has that. Is it Olive Garden? We treat people like family. I think they say, right? And I oftentimes joke to myself, please don't treat me like family. Right? Because man, there is nobody that can get after you the way family members can. Right? Having said that,
35:06 if we truly value relationships, then hopefully we are very mindful of of what we say to to a to someone, a family member or friend, how we say it, right? We take that extra care. I mean, would that we always did that because in the end, you know, each of us is is, you know, one of God's children and that that's how he wants us to handle things. Okay? But but setting that aside, let you know, maybe we maybe we just improve the way we deal with our family, family members and friends. So the language we
35:42 use when we're talking about the breakup of the business is important. Okay? We're breaking up the business, not the friendship. So the business isn't working out. Okay? Or we, you know, you could even say, you know, I think that our friendship is better served by not being in business anymore. I think that's a perfectly valid thing to say if it if it is indeed the case, right? But I think we have to be particularly careful to avoid any kind
36:18 of language that sounds like an attack on the other person or that makes them feel lesser. Okay. Now, now by the way, it could be that one of the friends is responsible for the business failing. Maybe they made a unilateral decision that was bad. Well, okay. So then there has to be a very tough in in sense of difficult conversation that takes place and hopefully the person who the one the friend who made the mistake will be able to take responsibility.
36:53 Okay, but that should be it, right? And by the way, if we did make a big mistake in a business, we should be willing to take the responsibility. We it shouldn't fall to our partner and friend to sort of hold our feet to the fire. Okay. Now, you know, if if the if the partner who made the gaff doesn't seem to be taking responsibility, then maybe the other partner has got to say something along the lines of, "I'm curious to know why you made that
37:30 decision, why you took that action because I I I honestly don't understand it." And I I'd like to I really want to understand why why you said or did or decided what you did. Right? That's a good way to start the discussion. It's not an attack on the person. It's it's it's the reaching across a a barrier of lack of knowledge. Okay. Um, and in a case where these conversations need to take place, or I should say
38:05 especially in a case where these kind of conversations need to take place, you may be well advised to have a third party sort of facilitating the conversation. Maybe it's a mediator, an advisor, you know, your maybe both, you know, your lawyer. Maybe both of you know your have known your lawyer for a long time and you can sit down and and the lawyer can help mediate the conversation. Or you could, you know, you could bring in someone like my friend Raphael Aen who has he his whole business is negotiation and mediation. bring in someone like Raphael who can
38:42 facilitate a candid honest discussion about what happened, what may what maybe needs to be done. And it's and if if it is a breakup, maybe having that third party there can help facilitate the discussion on on how that breakup will occur. And that will give the friends an opport a a better opportunity to um exit from the business with the friendship uh not only intact but unscathed. Okay. All right. Uh next. So
39:20 we want to plan for an exit that preserves dignity, the dignity of both friends. Now, by the way, I've been talking about a partnership with two friends, but of course, anything that I'm saying about two would apply to, you know, three, four, or more. Um, it's just easier to talk in two. Um, so, first of all, I think that the partners have to agree on a on on kind of the the story of the business breaking up that that that they're both with which they're both comfortable. Okay. uh even if it is one of the friends
39:57 fault that doesn't necessarily have to be the the way friends agree to talk about it. So they may just they may decide that public facing they're just going to say through mutual agreement we've decided that you know friend two is going to be exiting the business to move on to other ventures and friend one is going to stay in the business. Okay? You know you don't you don't necessarily owe anybody any more explanation than that.
40:33 Now, customers, clients, they may want to know what's going on. And and again, if if there's going to be additional information offered to customers and clients, both partners should agree on what that information is. Well, you know, and it friend two, you know, the two of us in in discussions decided that things will work better uh for for friend two if if if he moves on he he's you know not enjoying being a part of the business or
41:09 I don't know whatever whatever you decide to say. Okay. So you can you can have a second layer agreed upon narrative of of why the friends are breaking up to give to uh clients or customers with the understanding look this is not for public consumption. This is we're as a valued client or customer you know we're we're we're giving you this additional information but we're we're giving it to you in confidence. Okay. Um, so when two friends enter into negotiations for
41:46 the breakup of a business, uppermost in their mind should be that this is not about winning. Okay? This is about breaking up the partnership in a way that is as comfortable as possible for both the partners. I hesitate to use the word fairness because fairness is always in the eye of the beholder and many many times what's fair to me will look like something that's unfair to someone else. So I don't like that word. Um but what
42:22 we want is a resolution that uh that that both partners can essentially embrace. Maybe not completely wholeheartedly. Okay. Um, I think I mentioned this on the show before. My friend Greg, who's a lawyer, uh, a business lawyer, talks about this, uh, if he's negotiated a deal where both sides are a little bit unhappy, that deal is probably going to work out, right? If one side is really happy and the other side is really unhappy, that deal probably is not going
42:58 to stick. Okay? So, that's what we're looking for. uh a resolution to the problems, the situation that maybe both sides are a little bit unhappy with but but they recognize that overall it's it's the best solution that can be negotiated and now it can be affected and and you know the business can move on, the French can move on and and and do those vida as as we as is said in Russia. So uh again it's not about winning at that point and and I would argue again this is true for any business not just a
43:35 business between friends. So uh address the financial and business terms first. Okay. Because once once you you have clarity on those then you can gain emotional clarity. Okay. The business issues for the most part can be can be dealt with in a business-like fashion logically, you know, etc. Right? The emotional issues emotions are not always logical. In fact, they're seems like
44:10 they're rarely logical. Right? And so once there's mutually agreed upon terms for the breakup. So then the emotional issues can be dealt with after that and and it maybe if there was a mediator, the mediator needs to stay on for a couple of sessions dealing with the more emotional aspects of the breakup. Or maybe the partners need to go and see a therapist uh who can help them work through some of those emotional issues that maybe are still sort of hanging on
44:45 um even though the terms of the the business and financial terms of the breakup have been worked out. Those those can be those can be valuable. Okay. So uh just because so start with the business side of it and then work through the emotional side of it. Okay? Don't assume that because the business terms of the breakup have been concluded that therefore everything is done. No, probably not. When there's a friendship again that friendship is a separate entity from the business and so then it needs to be dealt with. Okay. And
45:24 finally, make sure that the terms of the breakup are put down in writing. Just as the initial terms of the business should have been in writing, so too the breakup should be in writing. And it should be a writing that both sides to which both sides agree. Okay? And and perhaps even something that they both sign. So there's not uh you know down the road uh you know one of the friends thinking hey I got hoodwinkedked or this isn't working out the way it was it was supposed to you know put it down on paper plain black and white as we say sign it probably and that way if there's
46:01 if if there's a misunderstanding down the road or conflict down the road I should say you can go back to that document and see what it actually says. Okay. So, what are some legal and uh financial guard rails that you can set up that can actually help maintain the friendship? Well, first of all, including in the formation of the agreement, the terms under which the partnership can be broken up. Now, I've been using this term partnership throughout the show. I I I mean it I don't mean a legal
46:37 partnership. I mean it in a a sort of general term, two people working together. The actual entity could be an LLC, it could be a partnership, could be a corporation, but the partnership is the two people working together. Okay?
46:51 >> [snorts]
46:52 >> Uh and so there should be some kind of mechanism by which the business the partners can part company and that should be in writing and that should be discussed and worked out at the time the business is created. That can that can go a long way toward avoiding problems if there needs to be a a breakup. Right? included in that should be a clear method for valuing the business, right? And how that valuation how it will be uh
47:28 uh how it will be obtained and and what it will mean in terms of the at least the financial and business side of of the breakup of the partnership. So this will avoid having to do the sort of emotional bargaining that sometimes goes on in such a fraught situation. Okay. As well the there should be an agreement on what the postb breakup roles will be for each person and that should be in writing as well. So if if it is really
48:04 going to be a restructuring where maybe both partners previously had taken an active part and now one partner is going to be more of a silent partner. Okay, so those should be defined. What does it mean to be a silent partner? What kind of authority is the active partner going to have? Now if one partner is going to exit the business, okay, fine. So then you know what role will that partner have in the business? And the answer may be none. Okay, but and if the answer is none again that should be in the agreement so that it's clear and then when the agreement is
48:40 signed you know maybe even initial that part or something like that. So there's no mistaking that once the breakup has occurred in the business you know friend two and you know the example I've been using is no longer a part of the business. Okay. So good documentation prevents disputes down the road because of a lapse in memory. We I think we all believe that we have, you know, really robust memories when of course it's it's just not the case. My my sister Mara and I have been indulging in this for for
49:17 quite a while now and and it we've been sharing memories of different events in our childhood and you know earlier parts of our adulthood and uh we we were talking about one particular thing about this is when I was uh I think maybe 12 13 years old I had an enormous crush on a friend of my sisters named Susie and uh we were talking about that uh when she came to visit uh earlier this week and and I was telling her where Susie lived and she told she was like no Susie
49:53 lived you right next door like no she did not right so look I mean on something that simple and and look you know in the end we just okay we're you know we're [snorts] not going to agree on this we don't know where Susie is so we can't ask her and it was too long ago I looked I tried to look in the public records to see if the house next door was owned by a family with the last name that that Susie had. And you know, the records didn't go back far enough. So, but memories can be faulty. And so, having good documentation of a breakup will uh
50:30 will avoid some of the conflict that could if not all of the conflict that could arise from faulty memories. And then finally, uh what is the friendship going to look like after uh the breakup? So, it's a good idea to set future expectations about contact early on and and I would I would say it would be best to maybe engage in getting together more frequently soon after the business breaks up to deal with any kind of
51:08 lingering emotional issues that that have arose arisen that have arisen as a result of the business breakup, right? So, you know, it it it again, just like I was saying earlier, overcommunication is almost always better than undercommunication. So getting together more frequently in the beginning is almost for sure going to be better than not getting together frequently enough because the latter will allow u bad feelings to to linger to sort of grow um
51:45 because there's not an opportunity to discuss them and and resolve them in some way whereas getting together frequently provides the forum to do that. So, um, if if there if the breakup was particularly heated, well, in that case, maybe it's better to kind of take some time off from each other so that things can be reset. But again, I I would encourage you to make it by mutual agreement. You know, you know, after the the breakup agreement is signed, maybe
52:20 the friend say, "Hey, you know what? I think we need to take a break from each other. Let's just not be in touch for the next 30 days, 60 days, and then, you know, at the beginning and, you know, at the end of 60 days, um, if you like, I I I'll call you and and, you know, we'll get together, maybe we'll have coffee or a drink and and, you know, kind of take it from there. That may be the better path. you know, this is obviously something that you would have to judge at at at at the time of going through such a thing. Okay? Uh but but to the
52:57 extent that the breakup was generally speaking amicable, so you know, keep things amicable, keep keep that going, okay? um and and and you know use creating a break and distance in the friendship as as a second option when it's it's necessary to avoid an escalation of bad feelings. Okay. Um the next thing is um friends should agree that once the breakup is done, it's
53:34 done. It shouldn't be brought up, you know, perpetually, especially in social settings. Uh, it's not good for the friendship. It's very difficult for other people, whether they be spouses, children, other friends. You know, they they don't want to see your, you know, business breakup trauma relitigated every time they get together. And and the reality is that to do that is to potentially alienate other friends, especially if those friends were were don't do you don't go in
54:11 business, right? You're going to hear it from them. I told you not to go into business. Now look what's going on, right? You're not going to want to hear it. So, you know, if if the business if if especially if you had other friends who said you shouldn't do it, nonetheless, you did it and then it breaks up, you know, and your and if your friends start saying you, see, I told you, I would stop them and I would say, you know what, you did. We made a decision anyway. It's it's not an appropriate thing for you to play the I told you so game. It's not helpful. It's not helpful to my
54:47 friendship with my friend that I went into business with and it's not helpful for our friendship. And if you value our friendship, you'll just you'll just drop those things. Okay? Because in the end, each of us, we have to do what we think is right. And you know, Joe and I thought this would work out. Okay, it didn't. That's the end of it. Okay. Um, and in the final analysis,
55:22 except that friendships evolve. Okay. It may be that the friendship will never be as close as it was after a business breakup. It does happen. Uh, unfortunately, okay. Um and and but this is what I will tell you as as someone who has a you know a number of decades under his belt. Uh time h has an amazing ability to heal wounds. And I know for myself and I, you know, I've I've had, you know, disputes come up between friends and I've I've gone
55:58 through periods where I was not in contact with people. Um, and then we've gotten back into contact and you know, the the slights and wounds from, you know, 10, 20 years ago don't seem nearly so important as re-engaging with that friend. There is, and I know this is a show on business and financial matters, there is nothing more important than a good friend. Um they they sustain us. They make life work worth living. And so
56:37 maybe friendships maybe the evolution of the friendship will be such that it never comes back to what it once was. But give it time. Let the wounds heal. Let the disappointment abate. And it may very well be that eventually the friendship will come back and maybe come back even stronger. Okay, so those are my thoughts on um business breakups with friends and indeed my thoughts on some thoughts on being in business with friends which again I I I
57:13 think can be a terrific idea depending on the circumstances. So I thank you very much for joining me today. Um, if you have any questions, criticisms, comments, uh, links to social media will be in the show notes when this episode posts on, uh, YouTube. Feel free to reach out. My email address is there as well. And let's see, this is the last show for this week. So, um, next week we'll be I'll be back with a full slate of shows. And let's see. Um, I think that wraps things up. So, uh, oh, uh, if you are not a subscriber, um,
57:51 please consider, uh, going on to YouTube or Spotify or Apple Podcast and subscribing. That way, you'll never miss an episode. I'd be really truly honored to have you as a subscriber. And if you know of a friend who might be who who might be able to benefit from like this show for example, maybe you have friends that are going through a business breakup, maybe send them a link to the show and say, "Hey, maybe this will help you out. This this, you know, this crazy guy that uh you know does people making money and uh I I I would love to have the opportunity to help
58:26 them out and perhaps even gain them as a subscriber as well. So again, thanks so much for joining me today. Wishing you a wonderful rest of the day and week and signing off as I always do. Marie darling, you are my bell. Courage.