Business Partnership Advisor
Together, we can fix your business and partnership problems
Chris Reich, Business Mediator
In Mediation Use Sense and Don’t Fight Over Cents
I’ve had it. No more. Done. I refuse to give another inch. She has gotten everything she wants and now this. No.
It’s Not Just Business, It’s Personal
When business partnerships go bad, very often someone wants out. That starts one of two possible processes. The business enters Wind Down and begins the process of closing or the partners start discussing a Buyout.
This post is about negotiating a buyout of a business partner’s interest. When they come to me, it usually means that the parties are very far apart in setting a value on the departing partner’s share. Closing that gap can be a very tense and complex process. Too often, by the time I am called, people have already dug their foxholes and are prepared to fight it out. Comments like the ones above are common. Both sides always feel like they are giving up too much and as the battle rages on major disagreements flare up over minor things.
Why do people cling to the smallest things? Negotiating a buyout of a business interest is a lot more personal than people on the outside realize. When you start a business, it’s a big decision. You might put up a lot of money. You might leave a job. You will work a lot of hours and not see much return in the early years. You take a lot of risk. So, yeah, it’s personal.
Business owners have much of their identity in their business. As a mediator, I know that simply saying “don’t take it personally, it’s only business” doesn’t cut it. I must allow time in the process to help people reach a place where they can make decisions based on reality and good sense. It’s hard to do and requires a lot of patience.
Decide What It’s Important
In the buyout discussion, you need to decide what’s important to you. Write down and prioritize those things. This list isn’t a battle plan, it’s to help you focus. After you make the list, decide what really matters to you by crossing off half the items on your list. You’re not going to get a million dollars, a future cut from the sale of the company, and a lifetime share of the profits. Think about what’s important and be realistic.
If you are sick of working with your partner, consider the value of getting your freedom. Do you want to have hours of meetings over keeping your cell phone when you can buy a new one with your buyout money and never have to deal with that idiot partner again? Think about it. Why do you want out of the partnership? Isn’t the escape from all the tension and liability worth something? As you get down to the wire, let go of the little stuff and help the closing process by being agreeable. I tell people, “it’s up to you and we can continue to have meetings about this, but is keeping your desk worth spending another $1,000 on mediation and lawyers?” Decide what’s important.
“As a mediator, I recommend parties prioritize their desires and focus on what matters most.” Chris Reich, Business Mediator
You Can Prove a Point or Get What You Want
Too often I see the negotiation process get tangled up because of emotional manipulation. One party likes exerting power over the other. Business partners can sometimes be real jerks. The point of this entire post is that I highly recommend that people keep in mind the reason they want out of the partnership and do what it takes to get out from under the bully partner.
That bully is going to argue over lots of little items that don’t make much difference in the total package but those little items often are tied to emotions. You hate to give up so much. You can’t stand the idea of letting that abusive, bully partner get everything they want. Here’s a secret. What they really want is power over you. When you fight to keep the laptop, cell phone, file cabinet, or some other replaceable item, you are giving the jerk exactly what they want. They really don’t care about a desk or a printer, they want you to stress.
You can negotiate. You can lay out your case about why you deserve to keep your cell phone. But if you can let go of that stuff and focus on the settlement and your escape from a terrible business partner, you’ll win. You’ll never prove the point. You’ll never hear that psychotic partner apologize. You can steal their pleasure and get your life back. That’s a win.
Don’t Fight Over Cents
My heart aches when we’ve had many hours of negotiations to work out a partnership separation only to have the tempers flare and the process stall over something silly. I often write off a lot of my own time just to help people out of a bad situation. But when I’ve worked hard to get a good compromise worked out only to have one of the partners insist on some stupid thing they know is going to trigger the other partner, it can get frustrating. I don’t mind writing off a few hours to finalize an agreement but I won’t work for free if someone wants to delay closure because of something stupid.
Is it worth paying another $500 to have a long meeting over who keeps a $20 stapler? Good grief. I hold my tongue but there are times I want to scream, “Grow up! This is nonsense.”
But heck, it’s your money. If you want to drag out the process in order to exert your will over your partner, it’s your choice but that doesn’t show character. It does show why your partner wants out.
“If you want to drag out the process in order to exert your will over your partner, it’s your choice but that doesn’t show character. It does show why your partner wants out. And if you’re on the other side dealing with an abusive partner, don’t let them stress you over a silly item that can be replaced. Getting out is more important than a chair!”
Somebody puts up money with someone who agrees to contribute labor as their contribution to an equal Partnership. Once things are set up, and a lot of money is spent, the other Partner fails to perform, and the troubles begin. I get 2-3 calls like this every week.
Partners take advantage of partners every day and they get away with it. It is the most painful call I get. It sounds like this, “I put all the money I had into starting our business. My partner had bad credit and no money, but he promised to do all the work to get the business going.
While it seems like it should be very easy to get out of an LLC, it can be complicated. Even if the business is very small, there are considerations beyond getting your money back. In this post, I’ll try to hit the important points of getting out of an LLC Partnership. These same items apply if you want to remove a member from your LLC too.