Founding Attorney
The conference table that once felt like neutral ground now has sides. Your business partner sits across from you with a lawyer, a number, and an ultimatum. Whether they actually have the power to force you out depends on what your governing documents say — and whether you have any at all. If your partnership or operating agreement includes a buyout agreement, also known as a buy-sell agreement, your business partner’s ability to force you out will be tempered by the provisions of that agreement. Without one, Florida’s Revised Uniform Partnership Act (RUPA), found primarily in Chapter 620 of the Florida Statutes, provides the default rules.
A Wellington business law attorney at Gueronniere, P.A. can review your governing documents, clarify your rights, and help you respond strategically to protect what you have built.
What Role Does a Buy-Sell Agreement Play in a Forced Buyout?
Your partnership agreement or LLC operating agreement is the first and most important document to review when a buyout dispute arises. Often, business partners have the foresight to create a “buy-sell” agreement. This agreement is a binding contract that specifies when a co-owner may sell their interest, who may purchase a share of an owner’s interest, and the price to be paid for that interest.
The agreement can also include provisions requiring the minority owner to sell their interest. These contracts come in handy in the event that one party wants to sell, but the other does not, or when a partner suffers a personal financial burden such as bankruptcy, divorce, or death.
If the agreement contains a buy-sell clause with specific triggering events, those terms are generally enforceable. If you haven’t triggered the buyout provision or otherwise violated the agreement, it will be difficult for your partner to force you out. But if a trigger event as defined by the buy-sell provision has occurred, you are required to abide by its terms, and if you refuse, your partner can petition the courts to impose an order to comply.
Some agreements include what is known as a shotgun clause (also called a push-pull provision). These push-pull agreements are triggered voluntarily by one partner or the other when one partner offers terms and conditions for a buyout to the other partner. The receiving partner must either accept the offer or purchase the offering partner’s interest on those same terms. This mechanism can effectively force a buyout without court involvement, so it is critical to understand whether your governing documents contain one.
If you are a Wellington business owner reviewing your agreement for the first time since formation, Grace de la Gueronniere can help you interpret these provisions and determine your exposure.
Can a Partner Force a Buyout Without an Agreement?
In the absence of a written partnership agreement or other contractual provision, state law will govern the available rules and remedies for the winding up of a partnership. Under Florida law, a partner generally cannot compel another partner to sell their interest outright just because they want one partner gone. However, there are indirect mechanisms that can produce a similar result.
Under Fla. Stat. §620.8801, a partnership is dissolved and its business must be wound up upon certain events, including when a partner in an at-will partnership gives notice of their express will to withdraw.
A partnership may continue when one or more partners want to leave. Partnerships can include buyout provisions in their partnership agreement that define when a partner’s share can be bought out, for how much, and by whom. But if there is no such provision and the departing partner’s exit triggers dissolution, the remaining partners may face the choice of buying out the departing partner’s interest or winding down the business entirely.
A partner can also petition a Florida court for judicial dissolution under specific circumstances. On application by a partner, a court may order dissolution if:
- The economic purpose of the partnership is likely to be unreasonably frustrated
- Another partner has engaged in conduct that makes it not reasonably practicable to carry on the business together
- It is not reasonably practicable to carry on the business in conformity with the partnership agreement
While judicial dissolution is not the same as a forced buyout, it can create pressure that leads to one, because neither side typically wants to see a profitable business liquidated by court order.
How Do Fiduciary Duties Affect Buyout Disputes in Florida?
Even when a partner has legitimate grounds to push for a buyout or dissolution, Florida law imposes limits on how they can go about it. The only fiduciary duties a partner owes to the partnership and the other partners are the duty of loyalty and the duty of care.
A partner’s duty of loyalty includes the obligation to refrain from dealing with the partnership on behalf of a party with an adverse interest, and to refrain from competing with the partnership before dissolution. A partner must also discharge their duties consistently with the obligation of good faith and fair dealing.
These duties matter in buyout disputes because a partner who engages in squeeze-out tactics, such as locking you out of financial records, withholding distributions, or making unilateral management decisions to devalue the business, may be breaching their fiduciary obligations. Trying to squeeze a partner out for personal gain is a classic breach of fiduciary duty, and a lawsuit can seek damages for financial harm suffered as a result. Recognizing these tactics early and documenting them is essential to protecting your ownership interest.
For LLCs in Florida, the rules differ slightly but the protections remain strong. In a proceeding initiated by a member to dissolve the company, the company or one or more other members may elect to purchase the entire interest of the petitioner at fair value. This “election to purchase” mechanism under Fla. Stat. §605.0706 can prevent dissolution while ensuring the departing member receives fair compensation. It also means that filing for dissolution does not automatically end the business; it often triggers a negotiation over what a fair buyout price looks like.
How Should You Protect Your Ownership Interest?
The strongest protection against an unwanted forced buyout is a well-drafted partnership agreement or operating agreement that addresses exit scenarios before they arise. If you already have an agreement, review it now with an attorney to understand whether its buy-sell provisions, valuation methods, and triggering events work in your favor or against you. If you do not have an agreement, Florida’s default statutes will control, and those defaults may not align with what you expected when you started the business.
Here are several steps to take if your partner is pushing for a buyout in Wellington or anywhere in Florida:
1. Review your governing documents. Your partnership agreement, operating agreement, or shareholder agreement is the starting point for understanding your rights and obligations.
2. Document everything. Keep records of all communications, financial transactions, and management decisions, especially if you suspect bad-faith conduct.
3. Obtain a business valuation. Establishing the fair market value of the business is a key starting point, because a partner buyout cannot be accurately or fairly executed without an instrument that objectively assesses the tangible and intangible assets of the company.
4. Consult a business attorney. An experienced Florida business lawyer can help you evaluate your options, whether that means negotiating a buyout, defending against dissolution, or pursuing claims for breach of fiduciary duty.
Taking these steps early puts you in a far stronger position than reacting after a partner has already set the process in motion.
Talk to Gueronniere, P.A. About Your Partnership Dispute
A partnership dispute can threaten the business you have spent years building. Whether you are facing a forced buyout, evaluating a buy-sell agreement, or considering your exit options, we can help you navigate Florida’s business laws with clarity and confidence. Contact our Wellington office today to schedule a free initial consultation so we can start protecting your interests.