If you've suffered through a bad business partnership that hasn't worked out as you envisioned, it is possible to escape without suffering a significant financial loss. A business partnership breakup is somewhat analogous to a marriage that doesn't work out. The business represents the child and both parties want custody.
The first thing to do is check your agreement. It will likely contain detailed information about how and when one of the partners can exit the partnership. If the business is an LLC, consult the operating agreement. If it is operated as a corporation, you'll have to refer to the shareholder agreement. If you own part of a small business and don't have anything in writing, refer to your state's default rules that apply to your unique entity. Each state has company laws and corporation laws that apply to silent agreements.
There will be a challenge if you are a member of an LLC or a shareholder of a corporation. It might not be possible to persuade your estranged business partner to buy you out and let you exit the partnership. Hopefully, the agreement that you have in place will have either a buy out/withdrawal remedy. It is also possible to force a business buy out. In certain situations, a partner can take his business family to court and request that a judge dissolve it. If the judge cooperates, he'll distribute the business's assets to the partners as he sees fit. However, this is an extreme step that hinges on the idiosyncratic facts of your business's dysfunctional situation.
It is also possible to petition the court for a forced dissolution if you own half the shares of an incorporated entity. You'll have to prove that the company's management is guilty of fraudulent, oppressive or illegal actions against you. Or, you can attempt to prove that management is deadlocked with no hope of achieving a resolution. It is worth noting that partners who own at least one fifth of a business are also permitted to petition in order to exit the business. However, the partner will have to prove that the other partner has acted in an illegal, oppressive or fraudulent manner. The judge will then decide if the liquidation of the corporation or a buy out is the proper remedy. He can also decide that the status quo is acceptable and the ownership situation should not change.
A partner can also sue the other owner(s) to exit the partnership. However, this might spur those partners to force a buy out of the other partner's stake in the company. Business corporation law permits estranged business owners to buy the other partner out for the fair value of his ownership percentage. The partners must choose to pursue a buy out within 90 days after the lawsuit has been filed with the court. If you can come to an agreement on the fair value of your ownership percentage, this is a realistic solution. Unfortunately, it is often difficult for disenfranchised partners to agree on such a value. http://goo.gl/H8HQ2L
The first thing to do is check your agreement. It will likely contain detailed information about how and when one of the partners can exit the partnership. If the business is an LLC, consult the operating agreement. If it is operated as a corporation, you'll have to refer to the shareholder agreement. If you own part of a small business and don't have anything in writing, refer to your state's default rules that apply to your unique entity. Each state has company laws and corporation laws that apply to silent agreements.
There will be a challenge if you are a member of an LLC or a shareholder of a corporation. It might not be possible to persuade your estranged business partner to buy you out and let you exit the partnership. Hopefully, the agreement that you have in place will have either a buy out/withdrawal remedy. It is also possible to force a business buy out. In certain situations, a partner can take his business family to court and request that a judge dissolve it. If the judge cooperates, he'll distribute the business's assets to the partners as he sees fit. However, this is an extreme step that hinges on the idiosyncratic facts of your business's dysfunctional situation.
It is also possible to petition the court for a forced dissolution if you own half the shares of an incorporated entity. You'll have to prove that the company's management is guilty of fraudulent, oppressive or illegal actions against you. Or, you can attempt to prove that management is deadlocked with no hope of achieving a resolution. It is worth noting that partners who own at least one fifth of a business are also permitted to petition in order to exit the business. However, the partner will have to prove that the other partner has acted in an illegal, oppressive or fraudulent manner. The judge will then decide if the liquidation of the corporation or a buy out is the proper remedy. He can also decide that the status quo is acceptable and the ownership situation should not change.
A partner can also sue the other owner(s) to exit the partnership. However, this might spur those partners to force a buy out of the other partner's stake in the company. Business corporation law permits estranged business owners to buy the other partner out for the fair value of his ownership percentage. The partners must choose to pursue a buy out within 90 days after the lawsuit has been filed with the court. If you can come to an agreement on the fair value of your ownership percentage, this is a realistic solution. Unfortunately, it is often difficult for disenfranchised partners to agree on such a value. http://goo.gl/H8HQ2L
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