What’s The Best Way To End A Business Partnership?

A business partnership is difficult to get through and there is always a chance that you or your partner may decide to call it quits. A partnership may break because of irrevocable differences between the partners, loss of interest or inability to commit to the business.

Either ways, the business must go on and hence the partnership must be dissolved in the best manner possible. A clean dissolution of the partnership ensures that the business continues on without problems.

Partnership Contract

Ideally, a partnership contract or agreement should have been signed when the partnership was formed. The contract includes how decisions are made, division of responsibilities, dispute resolution, and an exit clause.

You could also revisit the contract and make changes to it, allowing the partner to remain by giving up decision making powers and business shares.

If not, you follow the severance directions listed by the contract.

No Partnership Contract

If you don’t have a partnership contract that mentions severance or dissolution, both of you need to work a dissolution strategy.

Work on it Together

If you and your partner have an amiable relationship, you can exit the partnership yourselves without interference from others. The key is to be honest and reasonable.

Avoid the Rollercoaster

If the relationship between you and your partner has broken down, then you should get a lawyer to represent you. This way, you avoid emotional turmoil and smoothen the process. By keeping your emotions out, you prevent the negotiations from slowing down.


All a mediator does is to facilitate communication so that you and your business partner can reach an agreeable conclusion. However, a mediator cannot enforce any of the decisions that you both come to. The decision made during a mediation is made through good faith.


At all costs, avoid going to court. The next best thing to going to court is arbitration. An arbitrator will assess the evidence and speak to the involved parties before making a decision. The arbitrator’s decision is enforceable by law and has to be accepted.


If both of you are unwilling to find a resolution, you will have to go court. Going to court to resolve a partnership dissolution dispute is not advisable. It will cost and consume time. However, a court may only interfere under certain circumstances such as, if the partner is shown to be of unsound mind, if there is a breach of the partnership agreement, if the partnership can only be run at a loss, or if the court is of the opinion that it can interfere.

Every province has their own partnership law that dictates the right way of partnership dissolution. The Partnership Act of Alberta makes very clear statements on the dissolution of a partnership.

The best advice to exiting a partnership is this – if your relationship with the partner is on the rocks, get a lawyer to represent you.