You started your business with a friend 5 years ago, but now they want to move on. The problem is that you’re not sure how to address it.
For instance, perhaps they don’t just want to walk away. They own half of the business and they want that value. But do you actually have enough money to buy them out? And if you can’t, then what? They still want to leave the company. Do they have to accept less or do you have to find the money somewhere else? What options do you have?
Did you use a buy-sell clause?
The first thing to ask is just how the contract was set up. It may have a buy-sell clause in it that means that you have to follow what you agreed to at that time. This could create a way for the business to be sold, which has already been set up in advance. In other words, you can’t necessarily just refuse to buy the other person out.
After that, you may just have to consider negotiation. Maybe the amount that they’re asking for is simply too high and that’s why you can’t afford it, but there’s a lower number that the two of you can agree on. Perhaps you can find another business partner that you can bring on, someone with the money to take over that half of the business. Maybe there are ways to get a business loan once you negotiate your way to a solid number that you think is reasonable.
There are options, but this can all get very complicated and there’s a lot of money involved. Always make sure that you are well aware of the steps you’ll need to take.