Can You Force a Business Partner Buyout in Texas

Usually not directly, and the reason is worth understanding before you spend money finding out.
Texas gives an LLC member no right to withdraw and no right to expel, and there is no general
statutory mechanism that makes a co-owner buy your interest. What can force a buyout is a provision in
your own company agreement, enough pressure from a credible claim that the other side prefers a deal,
or — rarely, and only where everything else has failed — a court appointing a receiver or winding the
company up.

Part 0 of five. Next: Deciding on a Buyout and Pricing It →
· Start at the beginning: the full Texas partner buyout guide

"A member of a limited liability company may not withdraw or be expelled from the company."
— Tex. Bus. Orgs. Code § 101.107

Twenty-three words, and they run in both directions. You cannot hand back your units and walk. Your
co-owner cannot assemble a majority and remove you. Whatever happens next is either agreed or ordered.

That provision is in Chapter 101 and governs LLCs. Corporations and partnerships have their own
rules, and whether an LLC company agreement can change this default turns on the agreement's language.

Before anything else, read the agreement for four things:

A buy-sell or redemption provision, and what fires it. Death, disability, retirement, termination
of employment, an attempted transfer, a default. If one of those events has occurred, you may already
have a mechanism — and a deadline you have not started counting.

A put right. Rarer, and the most valuable provision an exiting owner can have: a right to require
the company or the other owners to buy at a stated price or by a stated process.

A shotgun or buy-sell-or-be-bought clause. One owner names a price; the other chooses whether to
buy or sell at it. Blunt, effective at breaking deadlock, and dangerous if the two owners have very
different access to cash.

Transfer restrictions. Whether you can sell to an outsider at all, and whose consent you need.
Usually restrictive, occasionally the only door that is open —
transfer restrictions in LLC and partnership agreements
covers how these are written.

If your company has no written agreement, the position is worse rather than simpler: § 101.107 still
applies, so there is no exit and no mechanism either. That case is worth reading about in
does a Texas LLC need an operating agreement.

This is what actually forces most buyouts, and it is not a legal mechanism. A co-owner who is content
to wait becomes willing to deal when waiting starts to cost them something — an information demand
they have to answer, a valuation they have to argue with, a claim that would put their compensation
and their related-party arrangements into a public record.

Two things make this work and one thing breaks it.

It works when you know your number. A demand without a supported valuation invites a counter-offer
anchored to nothing. Part 1 of this series covers how the number gets built.

It works when the claim is real. Diverted business, undisclosed related-party payments,
compensation set without authority, records withheld — these are the facts that change a
counterparty's arithmetic.

It breaks when the first letter is written to be satisfying. An opening demand aimed at making the
other owner feel accused converts a pricing conversation into a fight about character, and character
fights do not settle.

Involuntary winding up — and note which entities this one covers. For a domestic partnership or
LLC, a court may order the entity wound up and terminated on an owner's application where it
determines that the economic purpose is likely to be unreasonably frustrated, that another owner's
conduct makes it "not reasonably practicable to carry on the business with that owner," or that it
is not reasonably practicable to carry on the business in conformity with the governing
documents
(Tex. Bus. Orgs. Code § 11.314).

Rehabilitative receivership — which is a different thing from a liquidating one. Under § 11.404 a
court may appoint a receiver to rehabilitate the entity, on grounds including insolvency,
deadlock among the governing persons where the owners cannot break it and irreparable injury is
threatened, conduct by governing persons that is "illegal, oppressive, or fraudulent," and property
of the entity being "misapplied or wasted"
(§ 11.404).

Then read subsection (b), which is the part that matters. A court may appoint a receiver only if
circumstances necessitate it to conserve the business and avoid damage to interested parties, all
other requirements of law are met, and the court determines that "all other available legal and
equitable remedies … are inadequate." ⚠️ § 11.405 is the separate liquidating-receiver provision,
with its own grounds and the same inadequacy gate
(§ 11.405).
A rehabilitative receivership can end with management restored; a liquidating one does not.

Neither of these statutes gives you a right to be bought out. Winding up ends the company and
divides what is left. A receiver rehabilitates or liquidates it. ⇒ If what you want is to be paid for
your interest and leave the business intact, neither provision offers that on its own — which is why
these routes function mainly as pressure, and why a credible one is worth more in a negotiation than
in a courtroom.

⚠️ But "no statutory right" is not the same as "a court can never order one," and the difference
matters. In Ritchie v. Rupe, 443 S.W.3d 856, 877–78, 891–92 (Tex. 2014), the Supreme Court held
that Texas does not recognise a freestanding common-law claim for shareholder oppression, and that
the receivership statute does not itself authorise a buyout as an alternative oppression remedy.

What the Court did not do is close the door. It remanded for consideration of whether the
separate breach-of-fiduciary-duty claim could support a buyout, and expressly reserved whether a
properly appointed receiver might implement one consistently with the statute's purposes (id. at 877
n.32, 891–92). ⛔ Those are open questions, not a general remedy — a buyout does not become
available because the situation is unfair. The route, where one exists, runs through a specific
claim.

Three practical consequences, in order of how much they change what you should do this month.

The agreement is worth more than the grievance. An hour spent finding a buy-sell provision is
worth more than a week spent documenting how badly the other owner has behaved — and if there is no
provision, that is the single most important fact about your situation.

Time is not neutral. If income is being allocated to you on a K-1 while no cash is distributed, you
are paying to stay in a position you want out of. That clock runs on the tax calendar, not on the
other side's willingness.

Doing nothing is a choice with a price. Because there is no statutory exit, a locked-in owner who
waits is not preserving their position — they are waiting for the other side to improve theirs.

If a deal is possible, deciding on a buyout and pricing it
is Part 1 and it is where the number gets built.

If the honest answer is that a deal is not possible yet,
what a locked-in Texas owner can actually do covers the wider set of
routes, and our Texas partner dispute practice is what we do when
they are needed.

The partner buyout field guide is the printable version of the decision
points, in order, and it is written to be useful whether or not you ever hire a lawyer.

Disclaimer. This publication is provided by Amini & Conant, LLP for educational and informational purposes only and is not intended and should not be construed as legal advice. Should the reader seek further analysis of the subject matter or answers to specific questions about the subject matter, please contact the author at neema@aminiconant.com. This publication is considered advertising under applicable state laws.

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