Buying a company with 2 partners, 1 exiting

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by a searcher from Columbia University - Columbia Business School
in Scarsdale, NY 10583, USA

1yr ago

Buying a company with 2 partners, 1 exiting

Company has two founders at 50/50 ownership. Partner B wants to exit, Partner A wants to stay onboard and maintain current role.

Has anyone dealt w a situation like this? Would love to hear the good, the badf and the ugly.

Thanks!

Scott

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reply by a professional 1yr ago
from Dartmouth College in Los Angeles, CA, USA

First place to look is your operating agreement or shareholder agreement to see if it provides for a buyout. Often there are provisions which allow the company or the other shareholder to buy out the exiting partner with a promissory note to alleviate any cash crunch. There may also be a valuation mechanism. Regardless this is very common . You can find a third party to value the interest and negotiate a number and a payment plan.

reply by a searcher 1yr ago
from Columbia University in Scarsdale, NY 10583, USA

thanks for this! i agree on starting to speak with partner A ASAP... I view a convo with him as the next checkpoint/gate prior to spending more time on diligence. good point on the debt. i was expecting to pay out of my share...but a CF loan would be backed by 100% of the business....thanks!