Partnership disputes can be disruptive and can also be time-consuming and costly. For that reason, it is helpful to be familiar with business law resources that can help guide partners through their dispute to a resolution.
Options for resolving a partnership dispute
There are several options for resolving a partnership dispute including:
- Buy-out: If the partners conclude they cannot work together any longer but want the business to continue, it may be possible for one or more of the partners to buy out the other partner or partners. The partners will need to reference their partnership agreement, conduct a valuation and engage in negotiation if this is the route they decide to take.
- Sell out to new owners: If neither or none of the partners want to continue in the business but the business still has value, the partners may want to consider looking for a buyer which will also involve conducting a valuation of the business.
- Freeze-out merger: A freeze-out merger can occur when majority owners force out minority owners by forcing the purchase of their interests according to fair market value.
- Dissolution: If the partners agree not to continue the business, they may wish to dissolve it. If they agree to the dissolution, they can file the necessary paperwork to do so but if it is disputed, the judicial dissolution process may be required.
- Mediation: The mediation process utilizes a third-party mediator to help the partners work together to navigate and resolve their dispute.
- Litigation: If there has been misconduct or a violation of their obligations on the part of one of the partners, the other partner or partners may wish to pursue litigation against them.
Additional options for resolving a partnership dispute may also be available depending on the situation and circumstances. A business can suffer from a partnership dispute so it is useful for the partners to consider their options for addressing the dispute so they can determine the best option for them.