Bad partnerships

[wemakemoney]

I have my first business ever, been in the market for a year now, and my product is amazing, people love it, and I am the one who came up with the entire idea back in 2006, approached my current partner in 2012 to get on board with me knowing his dad has the money and is a lawyer so I can get both investment and legal fees waived at the same time, and I did exactly just that! I work my butt off because this is my baby and my dream come true, my passion is bleeding out of my eyes and everyone sees it.

The problem I have is that I am not majority since I have 45% and my partner and his father have the remaining 55% for investing. The bigger problem is that my partner lacks any sort of vision and he went to school for "entrepreneurship" which makes him think he knows everything about business. My partner also said that he "would rather fail small than fail big" in a business meeting with a big tech investor I networked with who wanted to invest 1MILLION into the business and everyone was silent when we heard those words.

My partner and his father do not want to give up control of the business and the reality of it is that my partners father wants to make sure his son has security and if he maintains control then he can look out for his son because he knows if any other investor was involved then they would see how lazy and unwise my partner really is.

I now have to make a decision, continue working my butt off with in hopes to try and buy them out eventually which I dont think they will ever give up control or let me have control even though I am the vision of the company, OR I find something else to do.

I have met so many people and have other opportunities but it is so hard to just walk away from this, the product is in demand, its a game-changer and I know I can make it success, I just need better partners and an ACTIVE investor who isn't my partners daddy sitting in the background who has the "swing vote" and on top of it all my partner is always talking about spending money and how we have to watch the money and its all because its his daddy's money. The investor I brought to the table even offered to guarantee my partners fathers investment back but they killed the deal by telling the investor his offer was not serious and never even countered. What do I do?????

 

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[GuestA4319]

I was in a similar situation a few years ago, but I didn't give up control....I don't know why you did that in the first place. In order to give control you must have a very well thought contract which also forces the partner to perform otherwise to get out.

Seems that the father is one that has the ropes here, that's why I would talk only with the father and make him understand that you can't continue together. A way to solve this is to buy your part back(or find another partner to buy it for you), but they must think that the business is failing....otherwise the deal won't be that good.

It's a complicated situation. Others should learn to think twice before giving up control of their ventures.

 

[Kevin Peter]

Can you not walk out with a tweaked version of the product and have it patented as new on your name with complete hold on you?

 

[SteveO]

You are in a tough spot. I like your option of staring another company while continuing to work this one. Once your other company takes hold, you can decide what to do with this one.

Make sure that you look at your agreement to see what you can and cannot do. You can be sure that they have protected themselves in the contract.

 

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[Get Right]

What does your partnership agreement say about Stock Dilution?

If nothing, one strategy would be to find another investor (who believes in you not them), dilute the stock until the lawyer and son don't have a majority.

*I am not a lawyer or offering legal advice, just seen it done before

 

[EdKirby]

You will want to consult with an attorney who specializes in business and contract law. They will be able to advise you as to what strategies you may be able to employ to regain control of your IP. Case in point, I'm having an issue with a company that I did business with and my lawyer and I were able to discuss various ways to accomplish what I needed to. He saw things that I never would have come up with myself even though I could read the contract and understood most of it. This is what they do day in and day out.

Just my 2 cents.

 

[MJ DeMarco]

Can they buy you out?

Any non-competes in place? Patents?

Any agreements on the table that we should know about?

 

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[jackcolton]

That is a tricky decision, for sure. There are a ton of missing details on this one, but I'd be on the side of getting rid of them at any cost. Either soon or soonish. If you're not happy with them now, it's unlikely that's not just going to get worse over time. Seems like your options are:

1) Give them an ultimatum for your continued involvement.
2) Work on something new. And wait until you feel you've gone as far as you can go with them, then sell your share.
3) Make them miserable.