Protecting Your Business

How to handle a business partner who wants out

On Behalf of | Oct 19, 2023 | Business Litigation |

According to, estimates say partnership failure occurs in about 70% of businesses. It is not uncommon to find yourself in a situation where your partner wants to walk away.

Navigating the complexities of a business partnership can be challenging. Sometimes, situations arise where a partner expresses the desire to exit the business. Handling this situation professionally and amicably can help to protect your business interests.

Open communication

The first step in handling a business partner’s desire to exit is to have an open and honest conversation. Sit down with your partner to understand his or her reasons for wanting to leave. This dialogue can help you both gain clarity on the situation and explore potential solutions.

Review your plan

The severing of the partnership will require consulting your partnership or operating agreement. It should outline the procedures for addressing partner exits.

You will need to determine the value of your partner’s stake in the company to plan the buyout. You also must decide how you will fund the purchasing of your partner’s stake in the company. Will the departing partner receive a lump sum payment, or will the buyout occur over time? Consider financing options, including loans or using the company’s profits to fund the buyout.

If there is no partnership or operating agreement, now is a good time to put one in place.

Legal transfer

Once you have an agreement on the terms of the exit, document the arrangement in a legal contract. It should address the transfer of the departing partner’s ownership stake, release of liabilities and any ongoing obligations.

Transition planning

Plan for a smooth transition by identifying how you will redistribute the partner’s responsibilities and duties within the company. This ensures that the business continues to function without disruptions. Throughout the process, maintain a professional and respectful attitude. Emotional conflicts can make the situation more difficult and harm your business’s reputation.

Notify stakeholders

Inform employees, clients and other relevant stakeholders about the partner’s departure. Be transparent about the changes and reassure them that the business will continue to operate smoothly.

Handling a business partner’s desire to exit requires careful planning. By addressing the situation methodically and professionally, you can protect your business interests and maintain positive relationships within the company.