The reason I sold my first business was a partnership dispute. I was in a long term bad relationship with my first business partner that while it was financially rewarding, the day to day arguments were terrible. We would fight over the smallest items, such as where to store documents, how to train new employees and which payroll provider to use. Each argument might last a week or longer and give rise to four more connected arguments. The years of the bickering and fighting had taken it’s toll and it was time to cash out. Leaving or buying out the partner wasn’t going to be easy because if we couldn’t get along while the business was running, how was the business divorce going to look? So one day my wife gave me a choice, either the business had to go or she was leaving me. I chose her over the business.
My first step was making a declaration that the relationship with the business partner was over. I had been postponing that decision for years but my mental health was suffering and I was just getting more tired in general. After discussing the issue at nauseating length with my wife, we reached out to the law firm Horwood Marcus & Berk. One of the partners, Sean Auton was a referral from a friend who liked him as a person and his style in general. Sean helped set out the plan of exit from a legal perspective (what do our agreements say and not say) and from a financial perspective (what is the price we would pay or take to leave the business). During this time, he was my confidant, best friend and psychologist. Deals are going to be messy and it’s important to have an outside support system that’s on your side. If you sense your legal team is not there with you, I’d recommend going out and getting another one, even mid deal.
Sean helped introduce me to banks to get funding, he helped me through some of the deal logistics and when times got difficult, he supported me emotionally. He also pushed from the business side when the terms looked wrong and went after the additional items that we needed to get. He also helped me arrange the financials in a way that the banks would accept for loan applications. When I was pushed, he pushed back. Between the support at home from my wife and Sean’s support, we made it through a transaction where I ultimately sold out of my position. I’m a bit older and a bit wiser now.
So, my survival checklist for selling your business in a partnership dispute is as follows:
Business Partnership Dispute – Sell your business checklist
- Get the company financials together
- Current financials
- Bank records
- Tax returns as far back as you can go
- Make sure you know where all of your legal documents are
- Partnership Agreement
- Any mutually signed contracts
- Any company signed contracts that are important to the business sale
- Contact a lawyer that has a specialty in your area of business or in business transactions in general
- I’d recommend listening to that lawyer if you get along with them, if you don’t or won’t, get a new lawyer
- Mention right away that you are in a partnership dispute
- Be patient and let the process work it’s magic
- Celebrate, the deal will come to an end at some point. Make sure when it ends, go out to dinner or buy yourself something to commemorate the exit
I’m not going to tell you the transaction in a partnership dispute is going to be easy, but I do know that eventually the transaction will be over. Whether you keep the business or sell it out, the best part will be when you never have to deal with your business partner again. Also, not all partnerships are bad, it’s probably just the one you are in now, so don’t blame humanity, just that person. If you are looking for an outside buyer to evaluate your deal, you can contact us and we would be happy to look over your information.