Insights · Deadlock · July 29, 2026
Deadlock: What Happens When 50% Cannot Agree with the Other 50%?
By Pierce Schultz, Esq.
Equal ownership may look like the fairest way to split a company, but it can put the whole thing at risk. If there is no way to resolve a 50/50 tie, even minor disagreements can spiral out of control, leaving the company paralyzed.
Florida law provides ways out of that stalemate, but the exit is narrower than many owners expect. During the case, receivership and custodianship can prevent irreparable harm to the company. See Fla. Stat. §§ 605.0704, 607.1432. But ultimately, most deadlock cases end in buyout. And the owner who reaches for it first is usually the one who ends up leaving and getting bought out.
What deadlock actually looks like
Deadlock is not limited to two 50/50 owners; it can arise in any arrangement where owners of half the interests cannot agree with owners of the other half (e.g., two 25% owners v. one 50% owner).
It could be disagreement about a discrete issue – such as passing a resolution, electing directors, signing a lease renewal, approving a tax return, or renewing a line of credit – or it could be deadlock over everything. Meanwhile, the business still has employees to pay, customers to serve, business to conduct, and deadlines.
First, check the documents you signed
Well-drafted shareholder agreements or operating agreements anticipate deadlock. They may have an individual, sometimes a third party, who is entitled to break a tie. They may have provisions allowing for a redemption or buyout, governance change, or a sale of all or substantially all of the assets of the corporation. If your documents contain machinery like this, it likely controls. See Fla. Stat. §§ 605.0702(2), 607.1430(3). If not, Florida’s statutory defaults take over.
The statutory off-ramp – dissolution and buyouts
In general, deadlock allows the court to dissolve corporations and LLCs. Fla. Stat. §§ 605.0702(1)(b)5., 607.1430(1)(b)1.-2. There are differences depending on whether the company is a corporation or an LLC, whether deadlock is preventing the election of directors, whether irreparable harm is threatened or suffered, etc. Suffice it to say, for purposes of this post, that deadlock generally enables judicial dissolution.
But if the company is profitable or has value as a going concern, the company is unlikely to actually be dissolved. See Freedman v. Fox, 67 So. 2d 692, 692 (Fla. 1953) (“The drastic action of dissolving a corporation will not be justified unless its affairs have reached the sorry state where the purposes for which it was organized are no longer possible of attainment.”).
The remedy is more often, in the alternative to dissolution, a buyout. After the petition for dissolution is filed, the Florida Statutes allow the corporation or other shareholders to elect, or the court to order, a buyout of the petitioning shareholder’s interest for fair value. Fla. Stat. §§ 605.0706, 607.1434, 607.1436. This is where most deadlock cases are resolved. In practice, a deadlock petition is the lever that converts paralysis into a priced exit.
Then the fight is about price
Once a buyout election is filed, the case is a valuation case. This is when the parties get specific, and your narrative must be translated into a number.
At this point, the value of a good, credible valuation expert is hard to overstate. And it is very important that your attorney work closely with your valuation expert because (1) the legal analysis often informs the valuation and (2) there are several unsettled areas of Florida law that are ripe for lawyers to advocate for their clients.
For example, Florida law is silent on the valuation of S corporations v. C corporations. Also, see here for analysis on whether discounts for lack of marketability and control apply in dissolution proceedings (that issue becomes even weirder in a deadlock case – is a 50% interest subject to such discounts?). These issues should be addressed at the beginning of your case in close cooperation with your attorney and your valuation expert so that you can make reasoned, informed decisions.
What this means for you
If your company is sliding toward deadlock, act before total paralysis kicks in. The business’s value erodes while you wait. Read your governing documents. Engage early with an attorney and a valuation professional.
And if you are forming a 50/50 company today – put a deadlock mechanism in your governing documents now, while you still like each other.