Home: Message List - Business Partner Wants Out - How to value business

Re: Business Partner Wants Out - How to value business

Bridge — Thu, 02 Apr 2009 03:20:47 GMT

If your partnership agreement does not has a predetrmined exit formula, "fair" is what each side accept.

Check your partnership agreement for non-compete clauses - you might be best off to shut dow/walk away from the business and start a new one wheere you are 100% owner. If it is a "client" based business, your customers will follow you.

Checck with an attorney on options from a contractula basis - this is probably cheaper than payiing your partner.

As a side note, a business with such a decline in revenues as yours is worth virtually nill on the "market".

Re: Business Partner Wants Out - How to value business

ohk12345 — Tue, 31 Mar 2009 13:16:08 GMT

My business is in Parkersburg, WV.

Re: Business Partner Wants Out - How to value business

LUCKIEST — Mon, 30 Mar 2009 22:06:24 GMT

How to value business, Welcome

I am a SCORE Counselor and another counselor is a "Forensic" Accountant.

Since we team our counseling I have sit in with him. His main function is to value the business for people who want to sell, split, or establish a value for an estate.

This is what you should be looking for. Since you did not share a name or location, I have no idea where you are located.

Hope this helps, LUCKIEST

Business Partner Wants Out - How to value business

ohk12345 — Mon, 30 Mar 2009 20:45:28 GMT

I have been in business 50/50 (S Corporation) for 16 years. My partner is ready to "retire". For the last 4 years he has not been interested in the business. My fault, I thought the day would come when I would take more time off etc. instead when I am preparing to do that he decides not to continue...I worked double what he did and when something needed done he would call it a day. Probably signs that the partnership was on a slide for awhile.

The business we are in does not have inventory or long term client contracts....we are consultants for oil and gas landwork. The value that has been in the company is the reputation my partner and I have established over the last 16 years. Last year we had the best year ever...this year has been, as for most, less than stellar. He wants me to come up with what I think a reasonable "buyout" would be. Our business is making money but this year could really be a struggle. I think he wants some type of deal where he gets 10% or some % of all future revenue. Because there has been inequality for awhile it is hard for me to stomach that I will continue to work and he will basically still be making money off of me.

Currently, our relationship is friendly but strained. I know that it is time for him to get out because his decision making is short-term and mine is still long-term. This includes how he handles situations with employees and clients. He doesn't care if he upsets or runs them off.

I know generally a company is valued on last few years sales...our gross sales last year were $6MN....this year it may be $1.5 MN at best......that's not net, we pay subcontractors day rate/expenses so there is a lot of cash flow in and out.

At this point, he is talking about being fair, etc. Does anyone have experience with a company situation like this and how best to handle a "buyout"?