When to buy out a business partner?

[KaptKaos]

How do you know when it's the right time to buy out a business partner?

I know it will be painful in the short term, but I think I am nearing that point.

Any advice?

[911Rob]

Sorry Kaptin, the question is too vague.

I've got several partnerships, I wouldn't think about buying out any of them.
But I have had partners that I bought out..... I used to wake up everyday and think about nothing else because I wanted to own the entire company and be free to make all the decisions. It took me 4 or 5 years, but I did it. Was one of the stupidist things I'd ever done! ha, ha. Live and Learn.

Weigh out all the options, plan for the worst and hope for the best as they say.

good luck,

[KaptKaos]

Sorry Rob, here's more info:

I have 2 partners. One is very involved and critical to the business. The other not so much. In fact, he's more of a liability than an asset.

I am just trying to square in my mind when I seriously consider this. Don't know what to do, so I figured I'd ask.

[911Rob]

Partnerships should include what they call a "shotgun" clause. If they don't they should.

A shotgun clause is basically the concept of putting the shoe on the other foot. One partner divides the cake up and the other partner picks which piece he wants.

Easiest way to get rid of a partner in my experience is to introduce the company to a challenge. Worked a couple times for me.

Otherwise, it must be a good deal for both parties. Fair and honest always works best, make a fair deal for the dude, lick your wounds and move on. If this is something you want to do down the road, introduce the idea of having a 'shotgun' clause in your partnership agreement and then have a lawyer draw the agreement up for you. These are standard.

Another must in a partnership is an insurance policy that pays out any heirs that would be entitled to ownership in the event of a loss of life; the policy pays out the heirs and prevents them from EVER having a say in the company. They are cheap, but good planning.

Cheers Kapt!

[KaptKaos]

Originally Posted by 911Rob

Easiest way to get rid of a partner in my experience is to introduce the company to a challenge. Worked a couple times for me.

What do you mean by this?

[911Rob]

Challenges are iminent; every business has them, as I'm sure yours does.

I had a development company, client of ours went broke after I built the shopping center and owed all the trades for the work. One partner said, If we don't get paid then we don't have to pay; I told him that wasn't ever gonna happen as long as I was the President (and it never did), so we bellied up to the bar and paid the subtrades out of pocket. The partner wouldn't do it, so I shotgun him and out he went with his tail between his legs.

I had another partnership that ended abruptly under a challenging contract negotiation. He had a soft plyable set of balls compared to mine; so we disagreed on the deal at hand and he walked out. That one ended ugly as he went and hid behind a lawyer. I crushed him legally, then gave him back his investment capital and said bye-bye forever.

So my point was simply that many people will fold under a challenging circumstance; those people should just keep their pay cheque jobs and stay out of bizzyness, imo.

Off for the day.....
Cheers,

[rusnak]

I bought out a partner and it was the best thing I ever did.

I don't think the question is when to do it. You know when it's the right time. I think the bigger question is how not to buy out a partner. You have to both want "out". You need a motivated buyer and a motivated seller in any deal for it to not go sour. If you want him out more than he wants to be out, then he has you by the balls. You have to make him want out, then it's time to negotiate.

[jorian]

I bought out a partner once too. Also the best thing I ever did. No one is indispensable. Wish I had figured that out earlier in life.