United States: Business Divorce Part I: Know Your Options

Last Updated: June 5 2017
Article by Jeremy Sugg

So: you are a business owner. Perhaps you are the managing member of an LLC or a minority shareholder in a corporation who has no involvement in the management of the company. Maybe you started the business with a long-time friend or family member or maybe inherited your ownership interest. It's possible that things are going great, and that you get along swimmingly with your co-owners.

Fast forward a few years, and things are going well, but you have differing views from your partners on how the business should be operating. You may be concerned about questionable dealings by one of your co-owners. Maybe your co-owners are concerned about you!

Whatever the circumstances, there may come a time when you and one or more of your fellow business owners no longer get along. What happens then? The answer to this question is as varied and complex as the circumstances surrounding the birth of your business.

Business Divorce in North Carolina: What You Need to Know

"Business divorce" is a term being used more frequently to refer to situations in which business owners can no longer work together and are looking for a way out. This may include getting out themselves or pushing one or more other co-owners out. It may also include a business owner who is unwillingly being pushed out.

Some of the more common events that can lead to business conflicts, business dissolution, and business divorce include:

  • General disagreement about the future of the business.
  • Inequity or perceived inequity.
  • Shareholder oppression or perceived shareholder oppression.
  • The termination of an employee/shareholder.
  • A wish by some shareholders to sell the business.
  • Retirement of a shareholder.
  • The death or disability of a shareholder.

The consequences of a hasty or unthoughtful business divorce or business dissolution can include lost assets, litigation, and other unwanted outcomes. For this reason, it is crucial you find legal guidance from a firm that regularly represents owners in business divorces and that is well-equipped to assist you or your business in working towards an efficient, smart, and legally sound solution to your unhappy circumstances.

Business Divorce Step 1: Assessing Your Circumstances

The first step in any business divorce should be a detailed analysis of the circumstances and the options available. Again, the circumstances in any business divorce can be as individualized as the placement of a comma in your business' operating agreement. Attention to detail is imperative in determining best steps forward, and taking a thorough, thoughtful, and informed look at your situation is the only way to ensure the optimal outcome.

Assessing the circumstances surrounding your business divorce and the best available options should include:

  • An investigation of the facts. Never take action before collecting all significant information. You may think you want out, but this may not be the best course of action for you or your business. To determine whether a business divorce best aligns with your wishes and interests, you must take a close look at how your choice may impact the business and your life. This includes analysis of the business' records and financial stability.
  • A review of the business' governing documents. In the case of a corporation, this may include reviewing the articles of incorporation, bylaws, and shareholder agreement. The documents you sign when you start the business are binding, even if the nature of the business has changed. Therefore, a close reading of these documents is necessary to determine any actions available and the steps necessary to exercise those actions.
  • A review and analysis of the relevant statutes and case law. If there are no governing documents that make clear a business owner's options in the event of a business dissolution, the options are determined by the applicable statutes and case law. Similarly, if a governing document is silent on any given issue or conflicts with the law, the statutes and case law control. Having an attorney who is very familiar with these laws is imperative to reaching the best outcome for all parties.
  • Objective counseling. Like marital divorce, business divorces are often very emotional situations. You may have been working with someone for many years and developed a close personal relationship. You may be related. In many cases, your relationship may be strained by both personal and business matters. Now that relationship is coming to an end, and it brings with it a threat to your livelihood, your reputation, and your years of effort. You may benefit from someone who can help you to look at the circumstances objectively and guide you to make rational decisions that are best for you and your business.

Whatever the reason for your business divorce, an attorney can help you fully understand your individual circumstances, the circumstances of your business, and your best plan of action for both. Make sure you fully understand the circumstances before embarking upon a business divorce. Not having all possible information at hand, and not understanding all of your legal options can have serious financial, legal, and personal consequences.

Depending on the information uncovered in the above assessment, you may decide to:

  • Keep your business intact.
  • Engage in mediation.
  • Engage in negotiations.
  • Dissolve the business.
  • Seek litigation.

Get Expert, Individualized Legal Representation with Lincoln Derr

With an experienced attorney at your side during your business divorce, you can rest assured that you are taking the right actions, acting legally, and acting as quickly as possible. We know that these conflicts can not only be technically complex, but also emotionally affecting. It is our place and profession to lead you through the process, protecting your interests at every step along the way.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Jeremy Sugg
In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions