Buying Out Your Business Partner The Brilliant Way

If you started a business with a partner, but feel you’re on a path to go solo, the road may be a bit bumpy at first. Having that conversation about buying out a business partner’s share of the company can be a difficult one. However, with the right approach, the talk can lead to a smooth transition and a stronger business foundation. Are you in the midst of figuring out how to buy out your business partner? Let us help!

Have an in-person one-on-one.

A big no-no would be delivering the news to your partner that you want to buy out the business through another person. Don’t make someone else do your dirty work. As well, refrain from sending an email or text message. Communication, as they always say, is key. Speak to your business partner in person. Have an open and honest conversation about your intentions. Discuss your reasons for wanting to buy the business out and listen to your partner’s perspective too.

“Unless you’re on really bad terms, approach your partner yourself rather than sending in an unbiased third party,” agrees New Zealand’s MoneyHub, “See how much you can work out one-on-one. Your partner will feel less defensive this way, and you’ll both be able to think clearer. Once you bring in the ‘big guns’ it’s like you’re asking for a fight, and no one wants that. It’s expensive and weakens your business.”

Accurately valuate the company.

Before you can negotiate the price of the buyout, it’s imperative that you determine the value of the business. Don’t guess. It’s wise to hire a professional appraiser so you can get an accurate valuation. You have to consider such factors such as the company’s assets, liabilities, revenue and future growth potential. As MoneyHub stresses, you can’t buy out your business partner unless you know what the business is worth.

“You may think you know its valuation, but getting an independent valuation is key,” insists their website, “What if it’s worth more than you thought? It could also be worthless. Knowing the exact valuation gives you numbers to work with when presenting your partner with an offer. A business valuation tells you not only how much the business is worth now, but it also projects future profits to help you create the most attractive offer to buy your partner out.”

Research your financing options.

Naturally, a buyout can be pricey. How will you afford this decision? Do you have personal savings? Have you secured an investor? Is it worth trying to apply for a bank loan? Be sure to evaluate the costs and benefits of each option. This will help you to determine the most suitable financing strategy for your situation.

“Many small to mid-size companies prefer to carry little to no debt, and are unfamiliar with options to structure a buy-out other than seller financing,” points out Patrick Ungashick of NAVIX Consultants, “If the company and/or buying co-owners can bring cash to the deal, that can motivate sellers to act, and perhaps take a lower price too.”

At Synergy Merchants, we have a long history of helping business professionals to afford buying out their business partners. With our unique merchant cash advance program, you can actually receive funding within 24 hours! To learn all about it, please don’t hesitate to call us at 1-877-718-2026 or email us at info@synergymerchants.com. You can also apply online for a free, no obligation quote!