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Can one business partner force the closure of a company?

Business partners don’t always see eye to eye about what they need to do to maximize the profits their organization generates or otherwise follow their established business plan. Sometimes, compromise is possible, but not all partnership disputes are concluded via an amicable resolution.

Occasionally, what one partner wants is to walk away from their shared company entirely. They may suggest the closure or dissolution of the business and might threaten legal action if their partner does not cooperate. Can one owner effectively force the other to shut down a business that they want to remain operational?

The contract between partners plays a major role in disputes

The agreement that partners signed when they start their company influences everything from the compensation that they received to how they resolve their disagreements. It is common for business partners to include terms that address disputes, like one partner’s desire to leave the company or dissolve the company while the other wants to continue with the status quo.

The partnership agreement may include a specific process that one partner can follow to end or dissolve the partnership. This could involve a buyout process that would allow the other partner to continue operating the company. Other times, the contract might specifically include provisions requiring the dissolution of the partnership if either partner wants to exit the company. In cases where there are terms included in the contract but one partner will not abide by them, the matter may end up litigated. The same thing could happen in a scenario where partners did not discuss dissolution or buyouts in their agreement when they initially started the company.

There may be more than one viable solution

People entrenched in business disputes often convince themselves that only their ideal outcome is acceptable. However, there is probably a broad range of prospective outcomes that could benefit both of the business partners in different ways. Individuals who are navigating a business partnership dispute often benefit from keeping an open mind and trying to evaluate all of their options.

Compromise and creativity are often key to allowing one partner to exit gracefully without destroying the relationship between the partners or the company they built together in the wake of a partnership dispute.



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