Running a business with a partner can feel a lot like a marriage. You share decision-making authority, financial risk, and long-term goals. And just like a marriage, sometimes the relationship breaks down.
When one owner of an Ohio limited liability company (LLC) wants to leave the business—but the other owner refuses to cooperate—the situation is often referred to as a “business divorce.” While not a statutory term, business divorces are very real disputes under Ohio law and frequently require court involvement.
This article explains what a business divorce is, how Ohio law treats these disputes, and the legal options available to an LLC member who wants out.
What Is a Business Divorce?
A business divorce occurs when the owners of a closely held business—most commonly an LLC—can no longer work together and need to separate their ownership interests.
Common Ohio business divorce scenarios include:
• One LLC member wants to exit the company, but the other refuses to buy them out
• A 50/50 deadlock that leaves the company unable to act
• Disputes over control, compensation, or decision-making authority
• Allegations of self-dealing or misuse of company funds
• A member being frozen out of management or profits
• A member’s death, divorce, or bankruptcy that throws ownership into question
Because LLC interests are not publicly traded, there is often no easy way to “sell” an ownership interest, which is why these disputes escalate.
Why Business Divorces Are So Difficult
Business divorces tend to be emotional, expensive, and disruptive because:
• The business is often the owners’ primary source of income
• Personal relationships may be involved (friends or family members)
• One member may control company finances or records
• Each side often has a drastically different view of the company’s value
Without a clear legal framework, disputes can linger and cause lasting financial harm.
The Operating Agreement Is the Starting Point
Under Ohio law, the operating agreement governs the rights and obligations of LLC members. A well-drafted operating agreement may address:
• Buyout rights and exit provisions
• How a departing member’s interest is valued
• Voting rights and management authority
• Deadlock resolution procedures
• Events triggering dissolution
Unfortunately, many Ohio LLCs either do not have an operating agreement or have one that does not address member withdrawal. When that happens, the Ohio Revised Limited Liability Company Act, R.C. Chapter 1706, fills the gaps. The Act, which took effect on February 11, 2022, applies to every Ohio LLC—regardless of when the company was formed—and it is built on freedom of contract: with limited exceptions, the operating agreement can override the statutory defaults. That flexibility cuts both ways. A well-drafted agreement can prevent a business divorce entirely; a poorly drafted one can hand the other side leverage.
Legal Options Under Ohio Law
Depending on the facts, available remedies may include:
1. Negotiated Buyout
A negotiated buyout is often the most efficient resolution. Counsel can help structure payment terms, valuation methods, releases, and indemnification to ensure a clean break. Valuation is usually the sticking point—the parties may rely on a formula in the operating agreement, a neutral appraisal, or competing expert opinions, and issues such as minority and marketability discounts can significantly move the number.
2. Judicial Dissolution (R.C. 1706.47(E))
Ohio courts may order judicial dissolution of an LLC when it is no longer reasonably practicable to carry on the company’s activities in conformity with its articles of organization and operating agreement. This remedy is frequently pursued in deadlock or extreme misconduct cases. Courts treat dissolution as a drastic remedy, however, and the realistic threat of it is often what drives the parties to a negotiated buyout.
3. Breach of Fiduciary Duty Claims
Whether—and which—fiduciary duties are owed depends on the company’s management structure and its operating agreement. Under R.C. 1706.31, members of a member-managed LLC owe default duties of loyalty and care to the company and to one another; in a manager-managed LLC, those duties generally fall on the managers instead (R.C. 1706.311). And under R.C. 1706.08, a written operating agreement may expand, restrict, or even eliminate fiduciary duties—although it cannot excuse a bad-faith violation of the implied covenant of good faith and fair dealing. Claims often arise when a member or manager:
• Diverts company funds
• Pays themselves excessive compensation
• Excludes another member from management
• Uses company assets for personal benefit
4. Accounting and Injunctive Relief
Courts may order an accounting of company finances or impose restrictions on company operations to prevent further harm while the dispute is pending. In appropriate cases, a court may also appoint a receiver to safeguard company assets.
5. Judicial Dissociation of a Member (R.C. 1706.411)
In some circumstances, a court may dissociate—effectively expel—a member whose wrongful conduct has adversely and materially affected the company’s activities, or whose conduct makes it not reasonably practicable to carry on the business with that member. Dissociation removes the member from management while the company itself continues.
Why “Just Walking Away” Is Risky
Simply stopping participation in the business does not eliminate liability. Without a formal separation:
• You may remain liable for company debts or obligations
• Your name may stay tied to contracts or loans
• Tax obligations may continue
• Disputes can resurface years later
Equally important: Ohio’s LLC Act does not give a departing member an automatic right to be bought out. A member who simply walks away may be left holding a bare economic interest—entitled to distributions if and when they are made, but with no voice in management. A properly documented exit is critical.
When to Speak with an Ohio Business Divorce Attorney
You should seek legal advice if:
• You want out of an LLC and the other member refuses
• The business is deadlocked
• You suspect financial misconduct
• You are being frozen out of decisions or profits
• The business relationship has become unworkable
Early intervention can often reduce litigation costs and preserve leverage.
One early, practical step is a records demand. Under R.C. 1706.33, a member may, on reasonable notice, inspect and copy company records that are material to the member’s rights and duties. A records demand is often the fastest way to test suspicions about company finances—and to build leverage—before committing to litigation.
Conclusion
Business divorces are among the most complex disputes in closely held companies. Ohio law provides remedies, but the right strategy depends on the operating agreement, ownership structure, and specific conduct at issue.
If you are facing a business divorce or an LLC ownership dispute in Ohio, the attorneys at Katz DiCuccio LLP can help you evaluate your options, protect your financial interests, and position you for the best possible outcome. Contact Steven M. Katz at 614-363-3500 or smk@katzdicuccio.com to schedule a consultation.
This article is for general informational purposes only and does not constitute legal advice. Reading this article does not create an attorney-client relationship with Katz DiCuccio LLP.
