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.

In association with
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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.