Jacobsen Law Firm

How can you buy out your business partner without a fight?

On Behalf of | Jan 25, 2023 | Business-Employment

The beginning of a business partnership is a lot like the honeymoon phase in a marriage. Both of you may have big dreams for the company you started together and may see the best in one another. After years of running the company jointly, you likely have a more realistic perspective on the company itself and on your partnership.

Maybe you want to take the company in a completely different direction next year, or perhaps you simply feel like your partner no longer commits an appropriate amount of effort to running the organization with you. You may have decided it is time to end your partnership and assume sole ownership of your business.

How can you buy out your partner without causing a protracted battle?

Make an appropriate offer

Your best chance of avoiding a dispute in a buyout scenario will come from adhering to your pre-existing agreements with your partner and making them a reasonable offer. Your partnership may already include specific terms for a buyout, including a specific severance package.

Fully complying with your pre-existing agreement will be crucial to your success. You also need to know what the company is worth and how much it will likely produce in future revenue if you want to make a reasonable buyout offer.

Present your offer in a positive manner

If you start your buyout conversation with a thorough explanation of how disappointed you have been in their job performance recently, you will put your partner on the defensive. Instead, consider highlighting reasons that this change of ownership would benefit them.

Maybe they have expressed fatigue with the industry in which you operate. Perhaps they have talked about retiring early previously. There are many ways to personalize your approach to this topic and make it as positive as possible for both of you.

What if your partner is not receptive?

Unfortunately, you may find yourself in a situation where your partner absolutely does not want to walk away from the business. At that point, you may have to explore alternate options, including letting them buy you out and starting your own company or dissolving the organization entirely if you do not believe you can continue working together.

Having backup plans in place and employing the right approach will be crucial to success as you negotiate with your business partner for an upcoming buyout.