Results Matter.

3 steps to take when preparing to buy out a partner

On Behalf of | Jun 4, 2024 | Uncategorized

Sometimes, the people who begin a business partnership together are in different stages of life. One offers far more work experience than the other and may not want to continue working for as long as their partner does. Other times, the partners could theoretically continue working indefinitely together, but issues slowly accumulate.

Business partnerships require a great deal of trust and cooperative effort. Issues ranging from interpersonal conflict to underwhelming job performance might lead to people wanting to cease working with a partner. A buyout allows one partner to acquire the interest of the other in the company. Those who take the three steps below prior to making a buyout offer may increase their chances of succeeding.

Review business paperwork carefully

The documents drafted by the partners when they started the business can provide a lot of insight into what each of them expects from the business and the partnership. In some cases, partnership agreements and business documents can make it clear what one partner can expect during a buyout. Other times, there may be specific procedures necessitated in the documents.

Establish a workable valuation

Determining what a business is worth is a key element of making a reasonable buyout offer. After all, making an appropriate offer for someone’s interest in the company requires first knowing what the business itself is worth. Depending on the type of company and the assets the organization owns, there are several different valuation methods that can help estimate what the company is actually worth. That figure plays a key role in making a reasonable offer to a business partner.

Make the offer attractive

Even someone who may have aspired to retire in the next few years may take it somewhat personally if a partner proposes to buy them out while complaining or making accusations. Addressing the buyout in a calm reasonable manner that highlights the benefits for a partner is often a better option than employing an adversarial approach. A gentler approach also helps preserve the relationship between the partners. Looking to tempt someone into leaving rather than forcing them out is the ideal in many cases.

A buyout does not need to be a contentious decision. In fact, those who handle business concerns carefully can potentially achieve a positive and peaceful solution. Having the right perspective and planning can make a big difference for someone proposing a buyout to a business partner.