Food & Drink1 min ago
my business partner wishes to leave the business
My business partner wishes to leave the business and wants to sign all shares over to me asap.
he has had very little to do with the business over the last 3 years and is a 70% shareholder.
I have ran the business for the last 3 years on my own and have had no input or help at all.
He has put in a small amount of money into the business £2500 and would like that back but the business cannot sustain a lump sum of this amount going out.
can anyone advise me on what is should do as it is just starting to go foward.
i am being put under pressure to sort this out asap.
he has had very little to do with the business over the last 3 years and is a 70% shareholder.
I have ran the business for the last 3 years on my own and have had no input or help at all.
He has put in a small amount of money into the business £2500 and would like that back but the business cannot sustain a lump sum of this amount going out.
can anyone advise me on what is should do as it is just starting to go foward.
i am being put under pressure to sort this out asap.
Answers
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As he is the major shareholder he has the deciding vote. You need to get together for a meeting to discuss the way forward.
Prepare by thinking through your options which may be to dissolve the business and start again by yourself, to agree a sum that his shares are currently worth and try to finance the purchase either with a loan or by taking another partner (risky), maybe agree a price and defer the payment or pay in installments?
Only you know what the business will bear.
Perhaps your accountant can advise the best way forward?
Prepare by thinking through your options which may be to dissolve the business and start again by yourself, to agree a sum that his shares are currently worth and try to finance the purchase either with a loan or by taking another partner (risky), maybe agree a price and defer the payment or pay in installments?
Only you know what the business will bear.
Perhaps your accountant can advise the best way forward?
Have you sat down with him and the books so he knows exactly what the financial position is at the moment. Surely he would not want to push you so that the Business goes under and he does not get anything but would be liable for any debts.
If you can persuade him to wait, could you put money by each month until you have enough to buy him out.
Is there anyone else you could work with prepared to buy his shareholding, or some of it and you buy a bigger share.
If you can persuade him to wait, could you put money by each month until you have enough to buy him out.
Is there anyone else you could work with prepared to buy his shareholding, or some of it and you buy a bigger share.
It's a limited company (presumably from the language used anyway) so he isn't going to be liable for any debts unless he's given a personal guarantee. Ignore that piece of advice from ubasses, it's irrelevant.
Likewise madmaggot and ubasses, he's not asking for money for his shares so valuation thereof is also irrelevant. He's gifting the company to Andy but wants a repayment of the £2,500 he's loaned the company. Andy says the company can't afford that.
If the business can't afford it Andy then there are fundamentally three (or four) options:
1 - Obtain an overdraft or loan to pay it off.
2 - Agree to pay him up over a period of time you believe you can afford (£200 per month or whatever).
3 - Put in money yourself to replace the £2,500 loan to him and repay from that.
4 - Find a third party who wants to invest in the business either for a share or an interest return and obtain funds from them to repay it.
That's pretty much your options. If you can't get an overdraft, don't have the funds yourself, don't have a third party (or don't want one) then his options are to accept a payment plan or close the company down, liquidate the assets and get what he can from it. As a 30% shareholder there isn't an awful lot you can do to prevent him refusing the payment plan if he so wishes. He could also sell his shares directly to a thirs party but there may be a shareholder agreement providing you with a right to veto prospective new partners?
Likewise madmaggot and ubasses, he's not asking for money for his shares so valuation thereof is also irrelevant. He's gifting the company to Andy but wants a repayment of the £2,500 he's loaned the company. Andy says the company can't afford that.
If the business can't afford it Andy then there are fundamentally three (or four) options:
1 - Obtain an overdraft or loan to pay it off.
2 - Agree to pay him up over a period of time you believe you can afford (£200 per month or whatever).
3 - Put in money yourself to replace the £2,500 loan to him and repay from that.
4 - Find a third party who wants to invest in the business either for a share or an interest return and obtain funds from them to repay it.
That's pretty much your options. If you can't get an overdraft, don't have the funds yourself, don't have a third party (or don't want one) then his options are to accept a payment plan or close the company down, liquidate the assets and get what he can from it. As a 30% shareholder there isn't an awful lot you can do to prevent him refusing the payment plan if he so wishes. He could also sell his shares directly to a thirs party but there may be a shareholder agreement providing you with a right to veto prospective new partners?
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