How Do I Force Out My Partner?
I'm a one-third owner of an LLC. One partner is not pulling her weight and we want her to go. If she, the partner, isn't willing to be bought out, what are my options?
Join us at Entrepreneur magazine's Growth Conference, Dec. 15 in Long Beach, Calif. for a day of fresh ideas, business mentoring and networking. Register here for exclusive pricing, available only for a limited time.When it comes to kicking out a business partner, you have three options: Follow the procedure set out in your operating agreement, negotiate a different deal altogether, or go to court.
If you have an operating agreement, it doesn't matter whether your partner wants to be bought out or not. If you have the requisite percentage of majority votes, you can make it happen.
The matter can become tricky if your operating agreement lacks a valuation clause. Without it, you could have a dispute about how much her share of the business is worth.
If you don't have an operating agreement, and your partner won't come to terms, your only recourse is to file a lawsuit and ask the court to do what your operating agreement would have done: Kick her out and determine how much she's owed.
However you look at it, isn't an attractive option. Unless your business is worth "squillions," there's a great likelihood that the attorney's fees could make this an expensive proposition for both sides unless you both come to a fair number.
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