How To Get Rid Of A 50/50 Business Partner Australia (2025 Updated)

Contents

When you go into business with a partner, there’s a number of scenarios you need to be prepared for. Chances are you’ve picked someone you trust and want to go into business with. Most founders don’t like to think about it – but in today’s fast‐paced 2025 business landscape, there may come a time when one partner wants to leave.

When this happens, it’s important to come up with a solution that is fair to all parties involved. Make sure you refer back to your internal agreements and review your legal documents to ensure they reflect current regulations and best practices. Our comprehensive guide on Legal Documents for Business is a great resource to help you stay updated.

In this article, we’ll go through the options you have when you want to get rid of a 50/50 business partner, and what legal documents you may need at the beginning of the business relationship to ensure this process runs smoothly should it ever arise.

Ending A Partnership

There is no simple solution or quick answer to ending a partnership in today’s dynamic market. How the partnership will conclude depends on several factors, including the circumstances behind a partner’s departure, the structure of your business, and whether any formal legal agreements are in place – agreements which should be periodically reviewed to keep pace with changes in law and market conditions.

You might want to consider going for a Co-founder Separation Consult to get expert legal advice on how to proceed – particularly with the recent regulatory updates in 2025.

How To Get Rid Of A 50/50 Business Partner In Australia

When a partnership is split 50/50, there are many reasons a partner might want to leave – and in some cases, they might not have much choice. Market pressures, personal circumstances, and strategic changes can all play a role.

As mentioned earlier, there is no quick fix to simply let a partner go – although a formal letter of termination can serve as the starting point for communicating an intention to end the relationship. Most businesses have their own internal procedures that govern a partner’s exit, and these should be aligned with the latest legal standards. For further insights, our Legal Advice for My Startup resource is worth a look.

Whatever scenario you’re faced with, it’s crucial to ensure the process is handled properly to avoid issues later on. Consider factors such as informing your investors, letting employees know what is going on, and revisiting your legal agreements. It’s also a good idea to think through how business matters will be managed moving forward – our guide on Business Structure for 2025 offers valuable advice for planning the future of your business.

When one partner leaves, you will also need to notify the Australian Securities and Investments Commission (ASIC) within 28 days of the change occurring. As of 2025, you can continue to update your business details easily via ASIC’s streamlined online portal – simply follow the instructions here.

Do I Need A Partnership Dissolution Agreement?

Yes, it’s highly recommended that you secure a Partnership Dissolution Agreement if you are ending your partnership. Just as it’s important to have a detailed agreement at the beginning of your partnership – as discussed in our article on Why You Need a Partnership Dissolution Agreement – it is equally essential to document all terms when the partnership comes to an end.

A Partnership Dissolution Agreement helps ensure you remain protected as the business winds down or when one partner departs. It provides clarity, outlines responsibilities and liabilities, and significantly reduces the risk of future disputes.

It covers matters such as:

The valuation of the business
What liabilities each partner is released from
Confidentiality
Warranties
Handling business matters up until the official dissolution of the partnership

Why You Need Strong Contracts

The best solution is to be prepared for these situations long before they arise. Having open and sometimes difficult conversations from the outset – and documenting everything in well-crafted contracts – can save you a lot of time, money, and stress later on. Our updated guide on legal agreements offers great strategies for building a robust foundation.

In order to give your business the best chance for future success, you need to have the right legal agreements in place. A strong contract can be the difference between a messy dispute and a smooth exit – let’s take a look at some options below.

Co-Founder Agreement

A co-founder agreement (also known as a Founders Agreement) is a key document that outlines the terms of your business partnership. In 2025, with market conditions continuously evolving, it’s essential that this agreement is tailored to your needs. It typically covers matters such as:

The equity each partner is entitled to
The tasks and responsibilities assigned to each partner
The decision-making process
Dispute resolution methods
What happens if one partner decides to exit the business

Having these terms clearly documented can help prevent future disagreements and provide clarity when decisions need to be made. For further guidance, check out our resource on choosing the right co-founder and setting up effective agreements.

Founders Term Sheet

A Founders Term Sheet is essentially a preliminary draft that sets out the key points discussed and agreed upon by the founders. In 2025, this document remains a vital precursor to the full, legally binding agreement. It enables founders to record their intentions before they proceed to draft a comprehensive Shareholders Agreement.

It’s important to note that the term sheet itself is not necessarily a legally binding agreement – it’s a pre-contractual document that guides the drafting of a full agreement. Once all parties are happy with the term sheet, its terms can then be incorporated into a formal Shareholders Agreement.

A Shareholders Agreement is the formal document which governs the relationship between founders (now shareholders), setting out how shares will be allocated, valued, and detailing what happens if a shareholder decides to exit.

Building A Strong Co-Founder Exit Strategy

Being prepared with the right documents can make the process much smoother when a co-founder decides to leave the business. In 2025, having a comprehensive exit strategy is more important than ever to protect your interests and ensure continuity.

A strong Co-Founder Exit Strategy clearly outlines the steps for an orderly transition. It can ensure that the departing partner is able to exit on fair financial terms while enabling the remaining founders to continue operating the business with minimal disruption.

The exit strategy can be crafted through various methods, including:

Selling the business
Taking the business public
Business mergers

The appropriate strategy will depend on the unique circumstances of your business. It’s advisable to talk to a legal expert to tailor an exit strategy that protects everyone’s interests. Additionally, staying informed with our updated business guides, such as our recent conclusion on business set-up, will help you navigate any regulatory changes as you plan your exit.

Remember, the business environment is constantly evolving, and what worked in previous years may not be sufficient in 2025. Regularly reviewing and updating your agreements and exit strategy is essential to ensure you’re always prepared to handle changes swiftly and in full compliance with current regulations. Our team at Sprintlaw is here to help you keep your legal foundations rock solid.

Key Takeaways

When a business partnership comes to an end, it’s crucial to have the right legal documents and informed strategies in place. Here’s what you should remember:

Partnerships can end for a variety of reasons
Deciding to part ways in a 50/50 partnership depends on your business’s unique circumstances and structure
Having a Partnership Dissolution Agreement in place is vital when ending a partnership
Strong contracts at the start of a partnership can simplify the process if a partner chooses to exit
Building a comprehensive co-founder exit strategy is essential for protecting all parties’ interests

If you’d like a consultation on managing the exit of a business partner or updating your agreements for 2025, please reach out to us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.

Sapna Goundan

Sapna has completed a Bachelor of Arts/Laws. Since graduating, she's worked primarily in the field of legal research and writing, and she now writes for Sprintlaw.

Do you need legal help?
Get in touch now!

We'll get back to you within 1 business day.