Partners' Dissociation and Partnerships' Dissolution and Winding Up
Partners' Dissociation and Partnerships' Dissolution and Winding Up
You are planning the formation of a 50-partner venture capital partnership. Knowing the attributes, weaknesses, and faults of humans, you expect that some partners will die, become ill, and act irresponsibly during the term of the partnership. You know that some partners will want to leave the partnership for good reasons and some for bad reasons. You know that when a partner leaves the partnership, the leaving partner will want to be paid the value of her partnership interest. You also know it is human nature for partners to disagree about the value of a partnership interest. You are also concerned about how the partnership will fund its repurchase of the leaving partner's interest without causing severe liquidity problems for the firm. You know that some of the firm's clients have strong business and personal attachments to one or more firm partners; therefore, when those partners leave the partnership, the firm may lose the business of those partners' clients. Finally, you know that the firm will need to add new partners from time to time to ensure the firm's survival.
What are the default rules that apply when partners leave and enter a partnership?
Why may the default rules be unacceptable to you?
Write the sections of the partnership agreement regarding partners' leaving and entering the partnership.
