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I've helped start and grow a lot of companies, and I've learned that partnerships end the way marriages do. Sometimes slowly. Sometimes all at once, with a text message on a Sunday night.
However it happens, the first few days matter more than most founders realize. What you do in the first 72 hours can shape the next two years. Here's how to get through them.
Hour one: don't do anything you can't take back.
Your instinct will be to act. Change the passwords. Cut off their salary. Move the money. Send the angry email. Don't, at least not until you've spoken to a lawyer. Co-founders usually owe each other legal duties, and a move that feels like self-defense can look like a breach of those duties to a judge. Many business disputes are won or lost on who behaved reasonably at the start.
The founder who stays calm in week one usually has the stronger hand in month six.
Find the paperwork.
Before you can know where you stand, you need to know what you signed. Pull together:
- The operating agreement, shareholder agreement or partnership agreement
- Any buy-sell or buyout provisions
- Vesting schedules and equity grants
- Employment agreements, including any non-compete or non-solicitation terms
- IP assignment agreements, which say who owns what the company built
These documents often decide what happens next. Many founders have never read them closely. Now's the time.
Your company's lawyer is probably not your lawyer.
This surprises people. The lawyer who set up your company and reviews your contracts usually represents the company, not you personally. When the owners are in conflict, that lawyer often can't take your side. You need your own counsel, and you need them early.
Protect the business, not just your position.
Customers, employees and lenders will notice if things wobble. Quietly make sure you know:
- Who controls the bank accounts and who can sign
- Who has access to the code, the domain, the customer data and the key accounts
- Which customer and vendor relationships are at risk
- That payroll will run on time
Document it. Don't act on it until you've had advice.
Preserve everything.
Don't delete emails, texts or files, even the embarrassing ones. If this ends up in litigation, destroying evidence can cost you more than anything in it. Assume everything you write from here on could be read aloud in a courtroom.
Say less.
With your co-founder: brief, calm and in writing. With employees and key customers: one consistent, reassuring message, and no blame. Nobody wins a business divorce on social media.
So who do you call?
You want a business litigator who has handled shareholder and partnership disputes before, ideally in the state where the company is formed. Look for someone who can try the case but knows how to settle it. Most business divorces end in a negotiated buyout, not a verdict, and the leverage for that negotiation is built in these first weeks.
This is not the moment to call whoever handled your lease.
Where Lexmatch fits.
These are exactly the matters people hand to whoever happens to be in their contacts. Lexmatch searches for lawyers with real experience in disputes like yours, and with Lexmatch Elite, a Lexmatch attorney can sit in on the interviews, help negotiate the engagement and keep the matter on track.
This article is general information, not legal advice. Every company's documents and situation are different.