How to End a Business Partnership – Make a Plan

Breakups are tough. And nowhere are they tougher than with business partnerships. It’s like a divorce with additional complications. And most of those are financial. You may not be able to salvage the personal relationship, but you can save yourself some money and hassle as you end your business partnership.

You want this partnership breakup to go as smoothly as possible, for financial and personal reasons. Setting up a plan will help.

First, consider your ultimate goal with this change, and second, consider making a plan — it’s called a dissolution plan or liquidation plan.

The suggestions in this article would apply to a partnership business entity or to an LLC with several owners (called “members”), which is is set up in a similar way. If you are in a small corporation or S corporation with only a few owners, this article might apply to you too.

Before You Decide to Close the Doors…

Dissolution — closing the doors of a business — should always be the last resort. Before you make a final decision to end the partnership, consider these questions:

What Does Your Partnership Agreement Say?

When you started the partnership, did you create a written partnership agreement, prepared by a competent attorney? It should include specifics about how to end the partnership or how to continue with changes to the status of one or more partners?

Having a written partnership agreement in place makes changes easier, and you may decide it’s worth it to continue. Without an agreement, closing will take longer and be more expensive.

If there is no partnership agreement, the partners will need to be able to work together to find common agreement. Having a difficult partner may be the reason you are dissolving the partnership, but you’ll have to find a way to get through it.


You might want to consider mediation in this situation before you resort to costly litigation.