Buying out a company from a good friend

by a searcher from University of Pennsylvania - The Wharton School

2 years ago

Thinking of buying out a very, very small company from a good friend who sold organic tea leaves straight from the farming country. He only seemed to sell to family and friends, but I like the idea and want to take it bigger. Right now I have 50% of the company but would like to one day own it, yet I still would like his help for the near future. Does anyone have any experience or resources in structuring a buyout? I am willing to give a percentage of profits, but not indefinitely and I would like to structure a fair buyout that he and I would both find attractive. Keeping it simple he wants cash and I want equity. 

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searcher from Washington University in St. Louis

I actually did someting similiar in###-###-#### I run a board game publishing company and bought a "competing brand" that was actaully owned by some friends of mine. It was mainly a hibbby then but it involved real money. I digested lots of books, seminars, and meetings with other who knew more than I did, both beofre and after the deal - about buying and selling companies - I actually think (just my humble opinion) the easiest part is the accounting and legal side of the deal. That's being done hundreds (thousands acually?) times each day. The difficult part is finding a deal that seems "fair" to both of you, without by default ending up with no deal and hurt feelings / pride and still having to work together. I think there are ways to do it, maybe the best is to bring a 3rd party in to say this is what the deal could look like, in order to set expectations. If either party thinks it's way off then you don't proceed, or the 3rd party works with them understand what is reasonable to them. Just my two cents.

2 years ago | like reply | 1 like

intermediary from University of Arizona

Haven't read all the comments so I apologize if someone has already said this. Brokers often leave stale or inactive offerings online to create the appearance of size, activity and range of their brokerage and its listings. Much of what appears to be for sale is not in fact for sale.

2 years ago | like reply | 0 likes

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