Buying out a bad Business Partner?

I have a new business, my Partner put in $25,000 to my $5,000. I did all the work and continue to run the business 100% and have not paid myself for four months.The business has been in operation for only two months.He appoached me on a buy out and I am willing to do this but only for his investment due to the fact that we do not know what the potential earnings will be. He is asking for his investment plus additional money. What is my best solution?

4 Answers

  • Eva
    Lv 7
    8 months ago

    Figure out how much interest he would have received had it been a loan. If he only contributed money and no expertise or skill, then that's really all he's entitled to.

  • Anonymous
    8 months ago

    Why the H*ll would you be entitled to the amount of his investment? You are crazy.

  • 8 months ago

    At a minimum, you need to pay him some interest on his investment if you want to buy him out.  

    If I were in his shoes, I would settle for a payment plan of some kind...but for $50k.  Otherwise, $30k in cash today and you own the business.  

  • cmac'm
    Lv 5
    8 months ago

    Nothing is tougher than a partnership. They rarely work out.

    You should agree on a current valuation of the company based primarily on assets; not valuation since the company is so young. Then give them their percentage cut based on your ownership level. Your cut is 20%. Keep it simple and document it.

    They might want to keep a percentage-NO- offer to have them as an employee with no ownership.

    And always make sure you are billing your own company for your time too. Keep records of that.

    Consider crunching the numbers on what it would take for you to start your own company so you have an idea what the cost would be, for leverage.

    You want something done the right way then you got to do it yourself. Good luck and keep the wheels turning.

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