How to Protect Yourself in a Business Partnership (Before It’s Too Late)

You Thought You’d Found the Perfect Business Partner... Until You Didn’t 

Going into business with someone is kind of like getting married – except there’s no cake, and if things go south, the fallout can hit your finances, your friendships, and your future. 

At O*NO Legal, we’ve seen it all: the dream partnerships that turn into legal nightmares, and the smart ones who got it right from the start. Whether you’re teaming up to start an agency, scale a business, or bring in a new director, there’s one golden rule: 

Hope for the best, but legally plan for the worst. 

In this blog, we’ll unpack: 

• Why shareholder arrangements beat old-school partnerships 

• What a “Partnership Roadmap” (aka a Shareholders' Agreement) should include 

• How to set up clear roles, values, and expectations 

• Common traps to avoid – and how we’ve helped agencies stay protected 

So before you jump into business bed with someone, here’s what you need to know. 

Why “Partnerships” Are Old School – and What to Do Instead 

You might still hear people say “we’re going into partnership together,” but the reality is, the legal structure matters a lot. 

Traditional partnerships (under partnership law) mean shared liability. If your partner does something wrong, you can be personally liable for it too – even if you had nothing to do with it. That’s risky. 

That’s why most real estate businesses now use a company structure with shareholders. The company becomes the operating entity, and each partner becomes a shareholder. Why is this better? 

• Limited liability (you’re not personally liable for your partner’s mistakes) 

• Cleaner ownership structures 

• Easier to bring in investors or new directors later 

• Potential tax benefits depending on structure 

But this is where many business owners go wrong – they focus on the contract for sale of shares (to get the deal done) and forget the most important document: the Shareholders’ Agreement. 

Your Shareholders’ Agreement is Your Partnership Roadmap 

If the company is the car, the Shareholders’ Agreement is the GPS. Without it, you’re driving blind. 

We call it your Partnership Roadmap – because that’s exactly what it is. It’s not just a document; it’s the guide to your business relationship. It spells out what happens before, during, and after your business marriage. 

Key things your Partnership Roadmap should cover: 

• Who does what – roles and responsibilities 

• How decisions are made – especially big ones like hiring, dividends, or selling the business 

• What happens if someone wants out – exit strategy, valuations, restraint clauses 

• What if there’s a deadlock? – dispute resolution process 

• What if someone stops performing? – accountability, consequences 

• What happens on death or permanent disablement 

• What happens if your business partner has been bad and needs to be exited  

Case Study: The Agency That Dodged a Bullet

A Melbourne-based real estate duo came to us after a messy shareholder split. They’d signed a basic free agreement template they found after a quick Google search. When one wanted out, there were no rules for valuation, no dispute process, and it nearly ended in court. We now help them with a rock-solid roadmap that gives them clarity, confidence, and sleep at night.

Choose the Right Person (Not Just the Person Right Now) 

A business partner might be your friend, your top-performing agent, or someone you met at a networking event – but that doesn’t mean they’re the right partner for the business. 

Here’s what to look for: 

• Shared vision – Do you both want to grow, or is one coasting? 

• Aligned values – Ethics, leadership style, communication 

• Money mindset – One partner might want to pull profits as income to fund their lifestyle, while the other wants to reinvest for business growth 

• Workload expectations – Is one full-time, the other hands-off? Clear this up early 

Case Study: The Misaligned Money Goals

Two agency founders approached us mid-fallout. One wanted to take big dividends to fund his lifestyle. The other was all-in on expansion and reinvesting. They never discussed it upfront – now they had clashing goals, tension, and a business stuck in limbo. We helped mediate and update their shareholders’ agreement to set rules around dividend decisions, reinvestment strategy, and future funding rounds.

Communication is Everything (Yes, Even When You’re Friends) 

Most business partnership problems don’t start big – they start small. A miscommunication here, a missed expectation there. 

Here’s how to stop that snowball: 

• Hold regular performance and planning meetings – Monthly or quarterly is a good start 

• Have clear and defined roles – Don’t just assume “they know what I mean” 

• Document decisions – Especially around money, hiring, and strategic changes 

• Make space for honest feedback – Business is emotional; talk it out regularly 

Even the best partnerships hit rough patches – the goal isn’t to avoid tension entirely, but to build a framework that helps you handle it. 

Case Study: The Communication Fix

A growing Brisbane agency had two directors constantly at odds. They weren’t speaking. Deadlocks everywhere. We facilitated a strategic review, reallocated roles based on strengths, set up a monthly decision-making framework, and gave them scripts for hard conversations. They’re now thriving – together.

Key Takeaways 

• Ditch the old-school partnership model. Use a company structure and become shareholders. 

• Don’t skip the Shareholders’ Agreement. It’s your Partnership Roadmap and is more important than the contract for sale. 

• Choose your partner wisely. Align on vision, values, and money mindset upfront. 

• Communicate often and clearly. Set roles, have regular meetings, and document decisions. 

Next Steps

Thinking of going into business with someone? Already have a partner but no formal agreement? Or maybe your current set-up is causing friction? 

Let’s make sure your partnership is future-proofed. 

Book a free 10-minute call with one of our real estate legal experts to talk about your current set-up and how we can help you build (or fix) your partnership roadmap. 

Frequently Asked Questions (FAQ)

• What’s the difference between a business partnership and being shareholders?

  In a traditional partnership, you and your partner are personally liable for each other’s actions. As shareholders in a company, your liability is limited – and the business is its own legal entity. 

• Do I really need a Shareholders’ Agreement?

  Yes. Even if you’re best friends or family. It’s the rulebook for how your business relationship will operate. Without it, you risk massive disputes down the line. 

• What happens if one partner wants to leave the business?

  Your Shareholders’ Agreement should set out what happens – including how to value shares, who can buy them, and any restraints. Without it, you’re stuck negotiating from scratch. 

• How do I know if my current shareholders agreement is good enough?

  Book a quick call with us. We’ll review it and tell you what’s missing (or what’s putting your agency at risk). 

• Can I create a Shareholders’ Agreement later if we didn’t do one at the start?

  Absolutely. It’s better to do it late than never. The sooner you put clear rules in place, the less chance of a messy split. 

Kristen Porter – Legal Director, O*NO Legal

Kristen Porter is the Founder and Legal Director of O*NO Legal. With over 20 years of legal experience and dual degrees in Law and Commerce, Kristen brings a rare blend of legal expertise and commercial insight to every matter. She is a trusted advisor to business owners and agency leaders across Australia, helping them build profitable, legally-sound businesses. Known for her practical, no-fluff advice, Kristen specialises in real estate agency law, corporate, and privacy law and regularly presents at industry events. At O*NO Legal, Kristen leads a team committed to making the law clear, actionable, and always aligned with your business goals.

Boring legal stuff: This article is general information only and cannot be regarded as legal, financial or accounting advice as it does not take into account your personal circumstances. For tailored advice, please contact us. PS - congratulations if you have read this far, you must love legal disclaimers or are a sucker for punishment.