How to get split from my business partner if we have an LLC?
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How to get split from my business partner if we have an LLC?
We have a partner who wants out but hasn’t fulfilled their services end of the
agreement. I put in an investment of 500K for my partner’s contractor services, plus his small $7500 investment. Now he wants out for 50% of the value and says that he will still develop in the future but he is retiring. I want him out completely. I’m not sure how to proceed.
Asked on July 29, 2018 under Business Law, Idaho
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 6 years ago | Contributor
If you have a "buy out" or similar provision in the operating agreement or other contract with this member (that is the correct term for an owner of or partner in an LLC), the answer is simple: you follow the terms of the agreement.
Without an agreement, it's up to you and him to work something out. You do NOT have to buy him out without a buyout agreement; you can force him to remain a member. On the other hand, as a member, he'll have the right to profit participation (e.g. a share of any distributions or, if you sell the business, the proceeds of the sale) without working. So there is an incentive for you and him to work out something that works for both of you, so you can rid yourself of a non-performing member and he can retire if that's what he wants, but you have to work it out voluntarily if there is nothing in writing detailing what happens if he wants out.
You mention a "services end of the agreement." That might give you some rights against him, if he is violating an agreement, but you have to review the agreement to see what rights might flow out of it; agreements and contacts are enforced as per their plain or exact language, so it is impossible for us to offer an opinion about this agreement without knowing what it says about his obligations and your remedies for a breach.
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