For whatever reason you have a partner(s). Shockingly, most business people fail to do due diligence on their partners before the join their individual practices into one firm. Personal finances of a partner(s) are just as important as their business holdings. Their liabilities both personal and corporate could impact you piece of the pie.
As an example, your partner has a teenage driver who is reckless and causes a major accident and even worse a death resulted in the mishap. Your partner has limited funds, no umbrella insurance and his biggest asset is his ownership percentage of the firm. The opposing property/casualty company and attorneys may look to garnish any asset they can secure. Your partner may have to sell his interest in the firm to liquidate enough for the settlement.
Both partners need a myriad of insurance contracts to protect against lawsuits from the other partner. As an additional example errors and omissions insurance should cover each partner, perhaps an additional policy for the firm as an entity. Marriage may be the most important partnership you ever enter into. Business partnerships are almost just as important. Make sure you good to go by thoroughly investigating your potential partner. His business is your business.
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