When Owner Disputes Stall Growth

Posted February 28, 2026 in Uncategorized

Ownership disputes don’t announce themselves with a lawsuit. They start with a missed distribution, a disagreement over reinvestment strategy, or a partner who stops showing up. By the time “deadlock” enters the conversation, the business has already lost months of momentum. For companies generating $1M to $25M in annual revenue, these disputes hit harder than expected. Vendor relationships freeze. Key employees look elsewhere. Banks get nervous about credit lines. In professional service environments, particularly medical and dental practices where revenue depends on provider continuity and regulatory compliance, a governance fight can quickly become an operational crisis. The question isn’t whether the dispute is frustrating. It’s whether it’s costing you more than the resolution would.

What Actually Triggers These Disputes

Most shareholder and operating agreement disputes fall into predictable categories. Recognizing them early changes the calculus.

Deadlock

A 50/50 ownership split sounds fair until neither side can approve a budget or authorize a capital call. Without a tie-breaking mechanism, operations grind to a halt. This is common in two-partner dental groups and surgery centers where both providers hold equal equity.

Oppression Claims

Minority shareholders who get squeezed out of management, denied financial records, or frozen out of distributions have legal remedies. Colorado courts take these claims seriously, and the factual record often builds for years before the minority owner acts.

Distribution Fights and Compensation Disputes

One owner takes a $400K salary while the other gets $180K and no distributions. Or profits get reinvested indefinitely while one partner needs liquidity. These disputes raise questions about fiduciary duty, self-dealing, and whether the operating agreement governs compensation.

Buy-Sell Triggers and Valuation Warfare

Buy-sell provisions are supposed to provide an orderly exit. In practice, they often create the fight. Triggering events are ambiguous. Valuation methods are outdated. One side’s appraiser values the company at 3x EBITDA; the other says 6x. The spread is the dispute. A Denver commercial litigation lawyer who understands both the legal framework and the financial mechanics can make a material difference in how these cases resolve.

Drafting Gaps That Create the Problem

Most of these disputes trace back to the agreement itself. Not because it was poorly written, but because it was written for a different stage of the business. Common gaps:

• No deadlock resolution mechanism (no tie-breaker, no mandatory mediation, no shotgun clause)
• Vague or absent distribution policies that leave timing and amounts to majority’s discretion
• Buy-sell provisions pegged to book value instead of fair market value
• No restrictions on competing activities or self-dealing
• Restrictive covenants that are unenforceable or nonexistent, particularly in healthcare settings where provider departures redirect patient volume overnight

When these gaps exist, the parties end up arguing over implied duties and statutory defaults. That’s expensive and unpredictable.

Assessing Your Litigation Leverage

Before filing anything, you need an honest leverage assessment. Who controls daily operations? The party running the business has a timing advantage; the party on the outside has urgency. Who has better access to financial records? Incomplete records are both a litigation risk and a negotiation tool. What’s the cost of the status quo? If the business operates profitably during litigation, the defendant has less pressure to settle. In MSO governance disputes and multi-location dental or medical groups, leverage also depends on whether providers can leave and take patients. A departing physician with a loyal patient base and no enforceable non-compete holds significant power regardless of what the agreement says.

Resolution Paths That Preserve Value

Litigation is one tool. It’s not always the right one. Depending on the leverage analysis, the better move might be:

• A negotiated buyout at an agreed-upon valuation with structured payments
• A judicial dissolution petition to force a sale or wind-down
• Injunctive relief to prevent asset dissipation while the dispute plays out
• A mediated restructuring of the operating agreement with updated terms

The goal is the same: separate the parties or restructure the relationship while keeping enterprise value intact. Destruction of business value during litigation is a real risk, and it should inform every tactical decision.

Where Healthcare Ownership Disputes Differ

Ownership disputes in medical practices, dental groups, and surgery centers carry additional layers. Regulatory compliance doesn’t pause for litigation. Credentialing, payer contracts, and licensing requirements create pressure that doesn’t exist in a typical manufacturing or real estate dispute. Partner buyouts in healthcare settings involve patient retention clauses, non-solicitation agreements, and transition-of-care obligations. If your operating agreement doesn’t address patient record transfers or referral relationships post-separation, you’re facing both a legal dispute and regulatory exposure. Working with a Denver commercial litigation lawyer who understands business disputes in regulated industries reduces the risk of collateral damage. Volpe Law LLC handles these disputes with attention to both commercial realities and industry-specific risks.

Questions Business Owners Ask First

Can I force my business partner to sell their interest?

It depends on your operating agreement. Some agreements include shotgun clauses, put/call options, or mandatory buyouts upon triggering events. If the agreement is silent, Colorado law provides limited statutory remedies, including judicial dissolution under certain conditions. The practical question is whether you can afford the buyout and whether the valuation fight is worth the cost.

How long do these disputes typically take to resolve?

It varies widely. A well-prepared negotiated exit can close in 60 to 90 days. Contested litigation with valuation disputes and discovery battles can take 12 to 24 months. The timeline depends on whether both sides are motivated to resolve or whether one party benefits from delay.

What if the operating agreement is outdated or incomplete?

Statutory default rules and common law fiduciary duties fill the gaps. That’s often worse for both parties because it introduces unpredictability. Courts look at the parties’ course of dealing, communications, and conduct to determine intent. Updating governance documents before a dispute arises is always cheaper than litigating after the fact. If your business is facing a governance dispute or you need to evaluate your options before one escalates, contact Volpe Law LLC to discuss a strategic approach tailored to your situation and your industry.