Starting a company with a business partner means that you have support and more resources than you would have if you tried to do everything on your own. Your partner can bring a fresh perspective and their experience to help you grow your business into a successful operation.
Still, like with any relationship, a business partnership can eventually outlive its usefulness. Perhaps your partner is at an age where they have retired from other work and they no longer have an interest in contributing regularly to your company. Maybe you have had a change of plans regarding the model for the company or your plans for its development.
If you want to continue owning and operating the company and believe that your partner doesn’t, buying out your partner could potentially be a positive end to an overall successful partnership.
Do you have the equity or capital necessary to make a reasonable offer?
Before you approach your partner and tell them you would like to take over the company on your own, you first need to know that it is feasible. You may have already agreed to certain buyout terms in your partnership contract.
If not, you may need to evaluate your company’s financial circumstances to determine what terms are reasonable. Rather than initiating negotiations you have no way of finishing, it is usually best to determine what you can offer your partner before you start that conversation.
What happens if they don’t agree?
Telling your partner you want to buy them out only to learn they have no interest in letting go of their ownership of the company can be a frustrating experience. Before you sit down to talk about ending the partnership, you should realistically consider what you want to do if they don’t agree.
Will you expect them to buy you out? Are you willing and able to continue running the company with them indefinitely? In some cases, you may need to create a new contract in order for your relationship to work going forward. Other times, you may need to go to mediation or possibly even court to settle a partnership dispute where one partner wants to sell or buy out the other but the other doesn’t agree.
Understanding your contractual obligations and the current and likely future value of your business will help you navigate buyout negotiations or contract disputes with your business partner.