Resolving a Dispute Between 50/50 Partners

In a company owned equally by two partners, communication between them had broken down, both on a strategic and personal level. Each wanted to buy out the other’s shares, but negotiations had reached a complete impasse.

At the request of their respective attorneys, we stepped in to facilitate mediation. 

The initial sessions helped ease tensions and reestablish constructive dialogue. During the third meeting, a breakthrough occurred: both parties realized that preserving the company’s value and breaking the deadlock served their mutual interest. 

The key issue was no longer to pit arguments against one another, but to offer each party a fair chance to buy out the other’s shares. 

We then proposed implementing a “Mexican Shootout” clause, which was immediately accepted by both parties. After the lawyers drafted the terms, we oversaw the process. One of the partners thus purchased the other partner’s shares. The outcome was fully satisfactory for both parties: one sold at the price he considered fair, and the other acquired the company without exceeding his budget. 

This intervention ensured the company’s long-term viability and sealed the separation in a smooth, respectful, and balanced manner. 

What is the “Mexican Shootout”? 

The Mexican Shootout is an effective arbitration mechanism in the event of a shareholder deadlock: 

• Principle: Each partner submits, in a sealed envelope, the financial offer they are willing to pay to buy out their partner’s shares. 
• Result: When the envelopes are opened, the party who submitted the highest offer automatically becomes the buyer at the price they submitted. 
• Advantage: This system encourages each party to make a realistic and fair offer from the outset, since no one knows in advance whether they will be the buyer or the seller. It eliminates speculation, guarantees a swift resolution, and protects the company.