There are several reasons that business partners may want to fire one of their colleagues. For instance, partners may wish to break up because of concerns about one partner’s contributions, disagreements about fundamental business decisions, or issues regarding compatibility of working styles.

Depending on the terms of your partnership agreement, you may be able to initiate the mandatory buyout of your business partner in Maryland if certain conditions have been satisfied. If your dispute cannot be resolved and your operating agreement does not establish terms for a buyout, then you may have to dissolve your partnership in order to cut dies with your associate.

If you are considering breaking up a business partnership in Maryland, seek guidance from our experienced Maryland business advisory attorneys at the Heyman Law Firm by calling (410) 305-9287 today.

How to Buy Out Your Business Partner in Maryland

During the formation of a business partnership in Maryland, the business’s owners will often create an agreement that dictates the terms of their partnership. A good agreement will explain the process for buying out a partner and establish the necessary shifts in responsibility for the remaining owners.

The provision in a partnership agreement that dictates the terms of a partner’s buyout is referred to as the “mandatory buyout clause.” You may create a mandatory buyout clause that triggers when one or more factors come into play. For example, you state that a mandatory buyout occurs when a partner fails to fulfill the responsibilities outlined by your agreement. If your partnership agreement establishes a mandatory buyout clause and the required elements have been met, then the partner at issue will be forced to sell their share of the business. However, if guidelines for a mandatory buyout have not been set forth, you will likely have to turn to other means of breaking up.

You may be able to buyout an unwanted partner if your business is actually arranged as a corporation rather than a partnership. In that case, each partner would constitute a company shareholder and could be forced out by the majority of other partners. This may not be feasible with limited liability companies or standard partnerships because owners of these businesses typically control equal shares of their companies.

Finally, as a drastic measure, you may get rid of a partner by dissolving your business entirely. Making such a decision can be very difficult for business owners. Support and counsel from our Maryland business advisory attorneys can be very helpful when seeking to fire one of your partners.

Breaking Up a Business Partnership in Maryland

If you wish to fire a business partner and your partnership agreement does not provide terms for a buyout, attempt to negotiate with the unwanted partner to see if agreed-upon terms can be established. Unfortunately, if an agreement cannot be reached, you may have to dissolve your partnership.

When a business partnership dissolves, the owners have to satisfy any debts and legal obligations they have before distributing their remaining assets. Typically, a concise set of steps for dissolution are explained by owners’ partnership agreements.

If you do not provide terms in your partnership agreement that govern dissolution or the exit of your partner, then state law may determine how your business is broken up. The requirements for dissolution may vary depending on what type of business you own. For instance, if you created a limited liability partnership, then the Maryland LLC Act dictates the process for dissolution.

How to Draft a Dissolution Agreement for a Partnership in Maryland

A dissolution agreement is a set of terms from your partnership agreement that dictates the terms for how your business will be dismantled. Such an agreement should touch on a wide array of issues that may arise during the process for dissolution. For example, a dissolution agreement should outline who will retain the property left over from the former partnership. Furthermore, a proper agreement will identify the partner who will handle the dissolution and the partner responsible for satisfying debt that cannot be paid by others.

After the terms of a dissolution agreement have been established, the document must be signed by every partner. The signed document then has to be filed with the state.

If terms for dissolution cannot be agreed upon, then unsatsified business owners may have to resolve their issues in court.

Reasons Why Business Partners Are Fired in Maryland

There are a multitude of reasons why business partners may wish to separate. The following are examples of why business partnerships are broken up in Maryland:

A Partner Fails to Contribute

For a partnership to succeed, each partner has to pull their own weight. A business can suffer when a partner fails to contribute their fair share. If your business partner is not living up to their expectations, you may wish to buy them out or dissolve your partnership.

Disagreements Regarding Business Decisions

Partnerships may also end when disagreements regarding important business decisions arise. In some instances, partners can discuss their differences and resolve their issues through compromise. However, in some instance, unresolved issues can cause businesses to lose money in clients.

Lack of Communication

Proper communication is a key aspect of healthy business partnerships. When owners do not properly communicate, or cannot communicate without arguing, their business can suffer.

Incompatible Working Styles

Lastly, partnerships may have to end because of incompatible working styles. If working styles are drastically different between business owners, then their partnership may have trouble reaching their goals.

If You Need to Fire a Business Partner in Maryland, Call Our Attorneys for Help

Before breaking up your business partnership, get help from our experienced Baltimore business advisory attorneys at the Heyman Law Firm today by dialing (410) 305-9287.