[Amnorix]

First, hard as it is, divorce the emotions from the process.

1. The business does or doesn't have value TO YOU based on its location, the lease, the name, the goodwill of the customers, etc. What THEY put into the business is COMPLETELY IRRELEVANT. If they whine about it, tell them it's just like buying a house -- when you go to sell, nobody cares what the prior owner paid for it.

2. DON'T waste money on a CPA to try to figure out what happened. Whatever has happened has happened. Whatever they did or didn't do in terms of swiping anything is done. If she kept crappy books and no records/receipts, etc., then the CPA is going to be handed a mess, spend a zillion hours figuring out nothing all for what purpose? You won't get a value of the business out of it, and probably won't even know what happened after all that aggravation.

3. One of the few good posts on this thread asked "what are you buying?". That is what you need to look at. Is there a name of the company that is worth anything? A website? A lease? What debts/obligations does the business have? Whatever they are YOU will have sole responsibility for them after this partner gets bought out. Look at what you're getting and be coldly dispassionate about it. What would you pay for it?Think of everything the business has - office space, telephone number, location, signage, customer goodwill, etc. What is that worth to you NOW? Not based on some fantasy of what you hope the business will be in three years. Finally, what would you pay to get this fool partner out of your life hassle-free, if you want to continue the business?

4. Flip side -- what is it worth to the partner to get out of this, if anything? Is she on the hook for half of the rent payments on leased space for five years? Is there a bank loan (unlikely). If she is getting off the hook on anything, that reduces the amount you pay. She wants to move on, and this may hold her back.

5. Consider if/how this business can succeed. There was a plan that originally needed a partner. She failed, but can your wife succeed on her own? Can she do everything she was supposed to do AND everything the partner was supposed to do? Should she cut her losses because it's too much weight for her to carry alone? Can someone else take part of the load as a second-in-command type? What's the plan? You can't figure out what it might be worth if you have no plan going forward.

6. Ultimately, the business is owned 50/50. J Diddy and Saul Good have it about right in terms of just valuing the hard assets. Unless she has leverage on you because she knows you want to continue the business, then all both sides are entitled to is basically liquidation value.

7. If the business was formed as an actual organization (whether corp or LLC), then you need something buying back the ownership interests in the entity. You should also exchange full releases. If it was an informal partnership, then you'll need something else -- an odd asset purchase agreement, dissolution-type thing, dissolving the partnership and putting all assets in your wife's name.

8. Keep in mind tax obligations in connection with all this. Consult with your accountant as necessary.


9. Ultimately, the best bet may be to say something like "hey, look, the business has made no money, has very little goodwill, and very few assets worth anything in a liquidation. I can't spend any serious money on this to keep it going, because I certainly won't get it back and now I need to hire someone to take the job that you were supposed to fill. I'll pay you $X (some number that is near half book value for the assets) for everything, we'll exchange mutual releases and move on with our lives. Otherwise, we can just auction it all off and split the proceeds."

That kind of line may bring reality into sharp focus for them.

I'm glad to answer more questions, including about legal documentation, though I'm traveling this week so my responses will be very spotty.