when a business partner resigns.....
 

long story short

One of my business partners in my wholesaling business has had it and wants to resign.....

Now do you give lump sum payout and say adios becasue the business will become fully mine now.....

How to deal with this any suggestions would be appreciated

Will he be starting a new venture in the same segment on his own or any risk of that..??

you can either buy him out completely, buy him out partially, usually with a no compete clause

in terms of pay off from the business
he doesn't have to take cash ... he couldn take fixed assets, i believe

if you got the money to give him a lump sum go for it. you can probably work it so that he gets less if he takes the lump sum - because he will be putting the business in a bad position ie cash strapped - "depriving the business of cash that could be used for xyz". plus there is the time value of money.

but if you pay out him out monthly - you might be responsible for paying a little interest - if he is smart enough to ask - that interest might also come in the form of him expecting more of a payout because he is having to wait to get his money... essentially he is still an owner of the company and could put a lien on the business til you have paid him off.

don't you have anyting in writing regarding what would happen if the company ever dissolved?

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

Lump sum is what i am going to do , now to i take in to considering the cash on hand, merchandise ( we have a 15,000 sq ft warehouse filled to capacity, or just shoot a number at him and say take it or leave it

Hindsight is a wonderful thing but when setting up a partnership you should always think about how it will be disolved if the time comes. It saves a lot of headaches at the end of the day.

whwere in ny are ya? are you mallcom?

What kind of stuff do you wholesale??

Did you have a partnership contract, by any chance? If so, your lawyer should have included some clause regarding this possible outcome.

just shoot a number and tell him take it or leave it

That would be one of the main reasons to draw up an official contract.

There should have been a partnership agreement with this situation anticipated. Easy to see that now, huh?

in few words....give him the chairs

Must suck to have to split money like that, yuck.

Good lucky.

I hope he wasn't your brother/cousin/uncle or any other relative. One of my high school buiz teachers told us to never start a partnership with a relative. :(

wouldn't his sudden death solve everything?

If you had a lawyer right up your operating agreement and didnt include anything how a partner get leaves/quits/whatever he needs to be fuckin fired.