Deadlock: your options when co-founders stop agreeing
Co-founders stop agreeing more often than they admit. Here are the realistic ways out, and what each one costs.
Elena Marlowe
·
8 min read
What a deadlock is
A deadlock is when owners with equal say can't agree, and the decisions that matter stall. Hiring, spending, selling: nothing moves.
It's more common than founders admit, and it gets more expensive every month it continues.
Your realistic options
01
Negotiate a buy-out
One owner buys the other at an agreed price. Fastest and cheapest.
02
Use the agreement's exit clause
Shotgun, mediation or valuation clauses can settle it without court.
03
Bring in a mediator
A neutral person helps you find terms both sides can accept.
04
Ask a court to dissolve
A last resort, when the business can't function any other way.
05
Sell the company
Sometimes the best price comes from a third party.
Most deadlocks end in a buy-out. The only question is whose.
What to avoid
Owners make the situation worse in four familiar ways:
Cutting the other owner out of information they're entitled to see.
Moving money or clients to a new company on the side.
Letting the dispute play out in front of staff and customers.
Waiting for the other side to blink.
If you're in one now
Document before you act
Save the agreement, recent financial statements and any emails about the disagreement. Don't change locks, accounts or access before speaking to a lawyer.
A calm first move usually protects your position better than a fast one.
What happens next
Most deadlocks resolve through a negotiated buy-out or a structured exit. A written assessment shows your options, their likely cost and a realistic timeline.
WRITTEN BY
Elena Marlowe
Commercial litigator in New York since 2013. I run a one-lawyer practice and write these to answer the questions I hear on first calls.
This article is general information, not legal advice about your situation. Reading it doesn’t create an attorney–client relationship.
KEY TAKEAWAYS
Check your agreement for a deadlock clause first
A buy-out is usually cheaper than court
Act before the business loses value
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