Remember the days when you and your business partner first got the ball rolling on a new venture? It was an exciting time, wasn’t it? It also must have been a difficult time considering the amount of energy and money that likely went into getting your business off the ground.
Well, times change. Your business may be going fairly well but only one of you truly still has his/her heart in the company. It’s time to buy out your business partner. But how do you even get started?
As Jennifer Sable explains on Chron.com, it’s important to have a buy-sell agreement in place. This agreement dictates the terms of a buyout in the event a partner wishes to leave the business or one partner wishes to buy out the other. If you don’t already have this buy-sell agreement in place, there are a few important steps that must be taken.
Calculate the value of your business.
Naturally, in order to buy out your business partner, the two of you need to come to an agreement about how much the business is worth. As Chris Risey points out on BusinessInsider.com, determining a company’s value is not an exact science. He highly suggests that this is something you try to not make a point of contention.
“Getting a formal valuation from an independent valuation firm can help, but determining the ‘right’ price is often only a ‘battle’ while getting the opportunity to build greater future value is about ‘winning the war’,” he writes, “In fact, I have seen buyers actually overpay to make a seller happy in order to ‘win the war’ and create greater equity value over time.”
Get legal representation.
As Risey intimates, getting professional help is of key importance. Even if you’re of the mind that the entire buyout process will be civil, it is vital that you hire a legal professional to take you through the required steps of completing the buyout properly. In addition to determining the value of the business, a lawyer can help you to negotiate agreements and terms, while also filing all of the necessary paperwork for the buyout.
“Even if the buyout is amicable, you need to have everything documented and on file so that no issues develop at a later point in time,” explains Sable, “Some important documents are the Mutual Release, which releases both partners from further claims, and the Release of Company Liabilities, which releases the departing partner from liability claims against the company.”
Have cash on hand.
If you’re serious about making the buyout process a quick one, it’s important to have cash available for your payment. “Nothing talks like cash,” insists Risey, “Whether they sell 100% or a portion of their ownership, selling owners get motivated when they get real cash upfront.”
At Synergy Merchants, we know how important it is for business owners to quickly get their hands on cash in order to buyout their former business partners. Our unique merchant cash advance program has helped many a Canadian business owner to complete their buyout processes and successfully take their companies to the next level.
Get your hands on the cash you need within 24 hours! For a free, no obligation quote, please don’t hesitate to call Synergy Merchants at 1-877-718-2026 or email us at email@example.com.