Ending a business partnership

[Jonathan carey]

My business partner and I have been trading for about 5 years together. Recent changes in my personal life means that he does not think I am committeed to the business as much as he is.
We are both 50% shareholders , but he is the only director.
We run a removals and clearance business and live opposite each other as well.
I believe we both want to carry on in the same line of work , but need to see how we can split the business fairly including contacts and leads as we both want to carry on doing the same thing after the business is dissolved
There is no debt in the business and a little in the bank .
many advice would be great

 

[Mr D]

Partnership?
Or limited company?

 

[Jonathan carey]

It’s a

Partnership?
Or limited company?

limited business , 50% share each , but he is sole director of the business

 

[Pot131]

My business partner and I have been trading for about 5 years together. Recent changes in my personal life means that he does not think I am committeed to the business as much as he is.
We are both 50% shareholders , but he is the only director.
We run a removals and clearance business and live opposite each other as well.
I believe we both want to carry on in the same line of work , but need to see how we can split the business fairly including contacts and leads as we both want to carry on doing the same thing after the business is dissolved
There is no debt in the business and a little in the bank .
many advice would be great

So you are both aiming to split the business sticking in the same trades whilst effectively becoming rivals? Sounds messy!

 

[Jonathan carey]

So you are both aiming to split the business sticking in the same trades whilst effectively becoming rivals? Sounds messy!

Yes , the idea is for it not to be too messy . We are friends as well I wouldn’t want to fall out .
Obviously there will be a some conflict in the future as we will be chasing the same work .
the idea would be to do this together , but separately . Sounds a bit nuts I know , but it might work

 

[Mr D]

Yes , the idea is for it not to be too messy . We are friends as well I wouldn’t want to fall out .
Obviously there will be a some conflict in the future as we will be chasing the same work .
the idea would be to do this together , but separately . Sounds a bit nuts I know , but it might work

If you do this together, make sure any contract sets out what is expected from each business.
If he thinks now that you are not committed enough - what will he think when he's in a different company?

 

[Jonathan carey]

If you do this together, make sure any contract sets out what is expected from each business.
If he thinks now that you are not committed enough - what will he think when he's in a different company?

Yes , the more I see it the more I think it won’t work .
Unless we have a clear breakdown of where we see the future business going

 

[BusterBloodvessel]

Is he right that you're not as committed to the business as he is? Do you have other distracting commitments that you would rather, or have to, focus more time on?

 

[Royce McCutcheon]

Easiest solution is a share buyback - agree on a valuation and then have the company buy back the shares out of retained profits over X years - fairly easy for a solicitor to draw this up for you.

 

[Jonathan carey]

Is he right that you're not as committed to the business as he is? Do you have other distracting commitments that you would rather, or have to, focus more time on?

Yes in short I will have more outside commitments which will have some impact , however this is fairly negligible and wouldn’t be too much of a distraction .

 

[Jonathan carey]

Easiest solution is a share buyback - agree on a valuation and then have the company buy back the shares out of retained profits over X years - fairly easy for a solicitor to draw this up for you.

Not a option I would be happy with as I intend to continue in the same trade and would like to take contacts and some of the goodwill with me

 

[BusterBloodvessel]

Yes in short I will have more outside commitments which will have some impact , however this is fairly negligible and wouldn’t be too much of a distraction .

Sorry for blunt questions - was in a rush!

However if by your own admission there are other things taking up your time but you want to continue the business, do you necessarily have to separate? Could you look at your partner taking a bigger share of the business and or taking a bigger share of the workload for extra renumeration? If you have to fit around other things, could you take on the more flexible parts of the work (bookkeeping, chasing leads etc.....not sure of the ins and outs of the business!) that you can fit into your own time but he does the more 'structured' jobs?

Just a thought...rather than feeling you have to defend your input or set up on your own could you not embrace that you have other commitments but discuss a plan to help you structure the business around that?

 

[Noah]

Could you look at your partner taking a bigger share of the business and or taking a bigger share of the workload for extra renumeration?

Struck me the same way. Must be preceded by a full-and-frank discussion to ensure you both understand and agree to the new arrangement, and that there are not ulterior motives or hidden resentment lurking. And followed by new written legals.

Splitting seems fraught with problems.

 

[Paul Norman]

This does, as suggested, sound like a time to sit down and renegotiate how the business works currently.

You have made no mention of shareholder agreements - thus I assume that there is not one - that would normally spell out exactly what happens if you want to go separate ways. In the absence of that it is about negotiating, and, if the values involved are worth it, getting solicitors involved in that - or at least a third party who is experienced in these matters.

But if you are still wanting to work together, I would suggest using the negotiations to work out a way forward that is OK for each of you, and drawing up clear contracts that record that.

 

[Chris Ashdown]

Just let him have a higher pay for the extra work he does

Remember the one who continues in the company will have a massive bonus as all the years of marketing and goodwill will remain with them and the other person will be starting from zilch and spending a lot more on marketing etc

Why as a partner are you not also a Director