When a person wants to take his or her business to the next level, it is often necessary to buy out the other business partner who doesn’t share the same vision. While a sticky situation, one can buy out their partner without any issues if they understand how to complete the job in a wise manner. Here are three steps to buying out a business partner.
Talk about it, in person:
First, when working with a partner, it is crucial to speak to him or her without fear. To start, when talking about this subject, an entrepreneur needs to mention his or her thoughts and concerns on the matter. Fortunately, if approached wisely and methodically, one can talk to their partner and resolve the issue quickly. Sometimes, one can fix the initial problem and avoid the buyout process. Remember, often, partners will let minor issues like credit card processing or merchant accounts cause problems. If one can fix the underlying situation, they will save time and money.
Come to terms and the dollar amount:
Now, if one can’t resolve the underlying problem, they need to come up with a viable plan to buy out the other partner. Ideally, when working on a solution, one will deal only in cash. With a cash buyout, an entrepreneur can keep his or her ex-partner happy. To decide the amount, the partners need to look at the profits and losses for the company. Then, by looking at industry standards, the owners can determine the true value of the organization.
Draw up paperwork with a lawyer:
While tempting to complete the task without legal counsel, it is unwise. The owners need to hire a qualified lawyer who can draft an agreement for the buyout. When writing the buyout agreement, the lawyer must include everything. Not only will he or she include the final buying price, but the lawyer also needs to lay out the process for transferring ownership for items such as the credit card processing and merchant accounts. While a time-consuming process, it will save both people anguish in the long run.
While not easy, if one follows these three steps, they can buy out their partner. Since it is a difficult process, an entrepreneur needs to exercise caution and take his or her time to avoid long-term issues.