THE RIGHT WAY! How to Get Rid of a Business Partner
If you’re reading this article, you are a business owner who has a partner, and you need to get rid of your partner. This is a dark topic, and you probably have some dark thoughts. You’re probably in a place where you’re disillusioned, maybe even up to betrayed. You’re angry at your business partner, maybe even angry at yourself, and you’re confused because you’ve got to figure out how to extricate yourself from the situation without giving up time, sweat, blood, and tears that you’ve poured into the business.
Of course, the third way to get rid of your business partner is to walk away. If you’ve watched the movie “Napoleon Dynamite,” you’ve been introduced to an individual named Rex Kwon Do, who runs a dojo and he teaches his students how to break the wrist grip and to walk away. That could be you. It may make sense, to get your freedom, to just walk away from the operation. As before, you’ve got to make sure that when you walk away, you’re leaving the liabilities behind. If you take the liabilities with you, you haven’t walked away.
Paul Simon famously sang the song “50 Ways to Leave Your Lover.” And that applies, but all of those 50 ways will take one of three forms. The first way to get rid of your business partner is to buy your partner out. The thing to keep in mind about this is you can only buy your business partner out if you come to an agreement. If you were smart and you had your act together way back when, you prepared an agreement that anticipated this day and you have a formula in place, and it’s pretty straightforward. If you’re
In addition, if you walk away, you will need to figure out what you can take with you. Sometimes a business’s most important assets are intellectual property, things that are in your head or in your computer, such as customer lists, your method of operation, vendors, the way you do business, or your business plans. You’ll need to sit down with an attorney to make sure you know what you can take with you and what you can’t. You need to find out
whether you have a non-compete agreement or any agreement that precludes you from continuing with a similar or the same business on your own. Also, you’ll have a lot of work to do to sort out which stuff is theirs and yours. That will depend on whether you’re walking away from a corporation, an LLC, or a proprietorship, but you need to figure out who owns what, from equipment to money. There will be a lot to sort through in the process of just walking away. An additional consideration to think about when walking away is how do you mechanically walk away? What steps do you need to take to formally tell your world, tell your partner that you’re not an officer or director of such and such corporation so that you can’t be tagged with personal responsibility for stuff that particular business does when you’re done? How do you physically separate yourself? Those are all things that you’ll want to talk with an experienced business attorney about so that you make a clean break. If you’re contemplating getting rid of your business partner, I invite you to read our free report entitled “How to Get Rid of a Parasitic Business Partner Without Ruining Your Life.”
like a lot of people, you don’t have that agreement in place with your partner. So, you’ll need to have a heart-to-heart talk with your partner and decide on which terms to buy your partner out. In this situation, an experienced business attorney can help you get negotiating leverage by holding your partner to their responsibilities as long as they remain in the business. Your second option to get rid of your business partner is to sell your interest, either to your partner or to a third party. Usually, you’re not going to sell it to some other person. In a closely held company, the partners often have a say over who else can be brought into the business. So, you may have to sell to your partner. If you’re limited to negotiating with one person, then they know you can’t get a competing offer that they have to bid against. So it may not be a fair price. You will want to talk confidentially with your own business attorney about how to level the playing field. Also, if you do sell your interest to a partner, you have to sell it in a way that ensures that none of the business liabilities are going to follow you. A lot of times, business partners will sign a lease and give a personal guarantee, or they’ll take out a loan and give a personal guarantee, or the business will have payroll tax liabilities that are not paid and those attach to the owners. There’s potential personal liability with some of the aspects of the business. If you’re going to sell out, you’ve got to make sure that you’re not taking those liabilities with you.
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