The Entrepreneur Forum | Startups | Entrepreneurship | Starting a Business | Motivation | Success

Question on partnerships & buy outs

Remove ads while supporting the Unscripted philosophy...become an INSIDER.

GoGetter24

Gold Contributor
Speedway Pass
Oct 8, 2017
566
1,148
365
Various
I've been bouncing around ideas for a new business partnership, but there's a few things I'm still having difficulty working out. I'm aiming to structure a very comprehensive and well thought out partnership agreement to minimize the chances of failure. [before anyone asks, yes corp. has been considered but partnership is a better fit for several reasons beyond the scope of this thread; and yes it'll eventually be put before a lawyer to check it's all kosher once we get clarity on what we want in it]

Let's say, for instance and hypothetically, it's an Iranian tourism services company. There are several partners with different skill sets, experience, aptitudes, and so on. One guy is an interpreter/guide guy, two guys are internet guys, one guy is a management guy, one guy knows his way around a camel.

The case I'm trying to cover is if some guys wants out, or the rest of the partners decide they need him out because he's turned out to be useless or lazy. How does one handle this?

Originally I thought you'd just pay out their capital account (paid in capital for their share of the partnership). But that wouldn't make sense for the same reason paying out the book value for shares wouldn't make sense.

So then I looked into how you'd evaluate the shares or execute the expulsion / buying out process. For both the valuation and the process, there were half a dozen different recommended methods.

So in the specific case of: it is a low capital, services based business, with a mixed-skill partnership who carries out work providing clients with packaged services. Somehow it has to be based on a "residual" business value after that partner leaves. E.g. if the camel guy leaves and the business grinds to a halt as a result until we replace him, that stuff has to be factored in. So does things like the rate of payout, how to fairly force a guy out if he's done well the last 2 years and helped the company grow, but has now become a raging drunk, etc.

Therefore, does anyone have any tips, or can point me in the right direction, or can recommend some good materials that might help me work out this part? Thanks
 

Don't like ads? Remove them while supporting the forum. Subscribe.

CareCPA

Platinum Contributor
FASTLANE INSIDER
Read Millionaire Fastlane
I've Read UNSCRIPTED
Summit Attendee
Speedway Pass
May 2, 2017
926
3,270
760
32
Pennsylvania
This is exactly what your lawyer should help you with. It sounds like you're going to use one anyway (and I always strongly recommend someone does if they are creating a business with multiple owners), so I would start there and see if either they can help, or if they have a referral for someone who does business valuations to help.
 

GoGetter24

Gold Contributor
Speedway Pass
Oct 8, 2017
566
1,148
365
Various
@CareCPA thanks. I've accepted this isn't a real business forum and yes I'll need to talk to someone with business experience in person.
 

Sponsored Offers

MARKETPLACE 7 Days To Freedom: From Wantrepreneur/Wage Slave To Freelancer
I attended the live session, really loved it! It gives some useful and practical tips on how to...
  • Sticky
MARKETPLACE Lex DeVille's - Advanced Freelance Udemy Courses!
Three things: 1. Discord Chat is open. Click here for free access. 2. New YouTube Channel...
  • Sticky
MARKETPLACE Fox Web School "Legend" Group Coaching Program 2021
Its for students who have joined. Did you sign up? Hey Rob, been watching your infoproduct and...
Introducing MJ's Personal Unscripted Network, Join Now for FREE!
Any chance to make it available outside of US? It has been available outside of the US on...
MARKETPLACE Not sure how to start? This free book will teach you how to build a successful web design business
If there’s one thread I see repeated over and over again on the forum, it goes like this: “I...
  • Sticky
MARKETPLACE You Are One Call Away From Living Your Dream Life - LightHouse’s Accountability Program ⚡
Thanks for clearing that up. What do you recommend for those who are still in the process of...



Forum Sponsor

Over 100 Fastlane Students
More Details...

New Topics

Fastlane Insiders

View the forum AD FREE.
Private, unindexed content
Detailed process/execution threads
Monthly conference calls with doers
Ideas needing execution, more!

Join Fastlane Insiders.

Top Bottom