Leaving a Partnership or Corporation
Leaving a Florida aPrtnership or Limited Liability Company (LLC)
It is one thing to leave a job. It is another thing to leave while owning some or all of the business itself.
Most small businesses, including professional practices such as law firms, medical practices, and accounting firms, are structured as partnerships, “S” corporations, or LLCs. It is wisest for the owners, members or partners in a small business to have a signed, written agreement in place that restricts the transfer of the interests. The agreement should contain a clear procedure to buy back the departing owner’s interest if they leave the company. After all, it is often impractical to own part of a small business but to no longer participate in it: disputes will likely erupt.
The same concerns can exist when an owner dies. In the absence of an agreement to the contrary, the decedent’s interest in a small business will pass to a surviving spouse or children. Once again, this is a recipe for conflict. To avoid problems, some provision needs to be made for a buyback of the decedent’s interest.
Unfortunately, many small businesses do not have adequate agreements in place to ensure the prompt and orderly buyout of a departing owner’s interest on definite terms. Even if an agreement exists, it may not answer every question, such as the price or terms of a buyout. After all, the shares may be very valuable. An appraisal may be required.
An experienced business lawyer can help negotiate an appropriate settlement of these issues. If no settlement is possible, a lawsuit may be necessary to settle the matter.