Protecting Your Business

Is your business partner stealing from the company?

On Behalf of | Jun 30, 2022 | Business Litigation |

Business partnerships are built on trust. A robust partnership or operating agreement can help solidify this trust and establish the guidelines and boundaries necessary for you both to work effectively together. But even with these parameters set up, you may be surprised to find your business partner stealing assets from you or the company.

Theft by a business partner can result in the end of a business if it is not swiftly addressed. How can you be sure your partner is stealing, and what steps should you take to save the business?

Theft can occur in a variety of ways

Business theft can take many forms, and not all of them involve the direct theft of money. Some common situations partners may encounter include:

  • Fraud: This occurs when a partner misrepresents the facts to deceive you or other stakeholders. Fraud can take a variety of forms, but all can have an equally negative impact on a business’s bottom line.
  • Embezzlement: Embezzlement is a form of fraud where an individual purposely misappropriates a business’s funds, breaching their fiduciary duty. An example of embezzlement would be a partner stealing money from the company bank account and manipulating financial records to hide their behavior.
  • Theft of intellectual property or trade secrets: The cornerstone of any business is its intellectual property. This can include trademarks, patents, proprietary software, specialized technical knowledge, product designs and other nontangible assets that are unique to the business. When your partner is stealing your intellectual property and using it for their own benefit or selling it to another business, the very essence of your company may be in jeopardy.
  • Poaching clients: This can be considered a form of intellectual property or trade secret theft. Stealing a list of clients or directing existing customers toward a separate business is seen as theft and will result in direct losses to your company’s bottom line.

If you have reason to believe your business partner is stealing from you or the company in any capacity, you should always act quickly to put a stop to this behavior and hold them accountable.

Finding an effective resolution to a partnership dispute

Partnership disputes are notoriously difficult to resolve, especially when you want to keep the business intact. While mediation is a more optimal approach for minor disputes, you may need to take more concrete action when a crime such as fraud is involved.

In some situations, you may be able to negotiate with the partner to take over their share of the business. Commercial litigation may be necessary, however, depending on the nature of the theft. Your partner may have stolen very valuable assets from the company, and in many cases they will not pay back those losses without a fight. A business litigation attorney can walk you through your options and help you choose the best path forward for your unique situation.