Liquidation Agreement



A liquidation agreement is a contract between partners in a business through which the parties dissolve the partnership and liquidate all of its assets.

Uses

  • Preparing for the end of a business partnership
  • Terminating a jointly-owned business.

Overview

Starting your business with partners or friends can help you get things off the ground. Business partners bring different skills and resources to a new company, and working together as a team can often increase efficiency and productivity. However, the more people involved in starting a company, the more likely it is that not everyone will agree about how the company should be run.

Good businesses are supported by effective planning. Entrepreneurs who start businesses with friends or co-founders are wise to plan for the end of the partnership. This liquidation agreement creates framework for dissolving the partnership between the founders of a company and dispensing of all business assets. This is a legal agreement between the co-owners of a company and, unlike charters or articles of incorporation, liquidation agreements do not need to be filed with the state. Rather, the liquidation agreement should be maintained just like any other important business record, like meeting minutes or a corporate resolution. An effective way to avoid future conflict is to make sure that you and all of your co-founders are on the same page with respect to how and when the partnership can end. By using this interactive liquidation agreement, companies started by partners can end their business relationship efficiently while retaining the cash value of their share of the assets of the company after all debts have been settled.

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