Can I be forced into a partner buyout I didn't initiate, just because the other partner wants out?
It depends on what your shareholders' agreement says. A shotgun clause, for example, is specifically designed to let one partner initiate a buyout process the other didn't ask for — once triggered, the recipient typically must either sell at the offered price or turn around and buy the initiating partner out at those same terms, so in that sense "forced" isn't quite right, since you retain a choice, just not the choice to simply do nothing. Other provisions, like a right of first refusal tied to a partner's desire to exit, work differently and may not force any immediate decision on you at all.
Without a shareholders' agreement, or without a clause covering this scenario, a partner generally can't unilaterally force you into a buyout just because they want to leave, though a partner determined to exit may still have other options, including selling their own shares subject to any transfer restrictions. Review your agreement closely before assuming you're required to act.
Key takeaways
- A shotgun clause forces a choice between buying and selling, not a one-sided outcome.
- Right-of-first-refusal provisions work differently and may not force an immediate decision.
- Without a relevant clause, a partner cannot unilaterally force you into a buyout.
- A departing partner may still have other exit routes, subject to any transfer restrictions.