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Lump sum is best and heres why and what to do:
Make him sign something that says that all inside knowledge of your business belongs to your company, meaning that for x ammount of years he cannot use this knowledge to compete against you.
Now, if you go the month by month thing, this guy could just piss you off, and claim he is still owner of the company until you pay him off and numerous problems can arise from this situation.
Ive been down this road before and trust me, you want to be done with this guy and as quickly as possible. Prolonging the process will only cause trouble. What if your company becomes the next microsoft and your still slowly paying him off? Although it hurts, the lump sum payment is the way to go.
Also, heres a fun twist you can pull if you dont like him..... designate the payout for "services rendered" meaning that the buyout is an expense to you, but reportable income for him... hehe
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