Money Buying out a Business Partner? - Page 3

NewChief · 11-26-2012, 10:45 PM

Okay,

My wife and her friend went into business together about 6 months ago. My wife supplied the design/buying/art, and the partner was supposed to handle the store front and books.

The partnership has soured (I don't even want to go into it). The partner and her husband are moving to a different town and wanting us to buy them out of the business. They claim that they have $11,000 in it (which we don't believe). We also suspect that there has been quite a bit of freewheeling with the books and her "paying" herself when she claims she hasn't drawn a dime, saying she's only put more and more of her own money into the business (while not documenting the shit in any meaningful way).

She says she wants their money back, and they'll be out. Here's the deal: The business hasn't made a profit yet. We're only 6 month in.

Some options:
1) Pay them and be done, but saddle ourselves with more debt.
2) Try to value the business, looking at assets and such, then decide on a price to pay them.
3) Have a CPA (or someone) go over the books to try to give an accurate picture of what's gone wrong in the first six months. Then tell them to get bent because there was unethical shit occurring.

Other ideas? I'm stressed as hell about this right now, and we plan on hiring a CPA once the partner is gone. The business model is solid, and sales are good. We just suspect that we're not doing well because of poor book keeping and money "leakages." We do feel like the business is a liability, and few investors in a business would expect to be able to get their full money back in 6 months of doing business.

Groves · 11-26-2012, 11:54 PM

Quote:

Originally Posted by Phobia

A business is worth roughly twice its annual profit. If the profit is $30k, by all means give them $15k. Otherwise, they made a bad investment and they should learn from it. They're the ones moving. If they want to stay and work the business into profitability then they should do that. Otherwise they should spend $300 on a community college business course.

or a Math course, apparently.

MOhillbilly · 11-26-2012, 11:59 PM

Read the book Sammy the Bull put out. It's full of hostile takeover tactics.

11-27-2012, 12:12 AM

Quote:

Originally Posted by Groves

or a Math course, apparently.

They have to account for the money the lady is skimming.

Simply Red · 11-27-2012, 12:16 AM

i think you should ask PostalChief.

11-27-2012, 12:20 AM

Heh. I realize my math was hasty (and backwards) but the point was that the business is not profitable. Zero x 2 is still zero.

**HayWire** · 11-27-2012, 12:26 AM

Seperate yourself, have an independant consultant look over the financials, separte yourself, get advice from a proffesional in the field, seperate yourself, go over results from the financials/professional.

It's business, shit happens.......get professional advice and make a decision from there.

**BossChief** · 11-27-2012, 12:32 AM

Make 3 investments

A match
3 gallons of gas
An insurance policy

Simply Red · 11-27-2012, 12:39 AM

I'd definitely consider murder here. Do you have a chainsaw NewChief?

**Buehler445** · 11-27-2012, 12:39 AM

If it were me I'd offer what you think you can make work. If that's $14, offer $14. If they don't want it, liquidate. You can always start your own business. That's basically what you're doing anyway. Unless it is a legal entity and the name is filed with the state, you can even use the name.

Operate it like a business, don't get married to it.

**DaneMcCloud** · 11-27-2012, 12:42 AM

Quote:

Originally Posted by Buehler445

If it were me I'd offer what you think you can make work. If that's $14, offer $14. If they don't want it, liquidate. You can always start your own business. That's basically what you're doing anyway. Unless it is a legal entity and the name is filed with the state, you can even use the name.

Operate it like a business, don't get married to it.

In California, you can't you start a business without a DBA or LLC. I have city permit filed as well.

Is that not necessary in other states?

**Buehler445** · 11-27-2012, 01:04 AM

Quote:

Originally Posted by DaneMcCloud

In California, you can't you start a business without a DBA or LLC. I have city permit filed as well.

Is that not necessary in other states?

Not necessarily. My person farm doesn't. Lots of schedule C type enterprises don't. Only if it is a separate entity.

munkey · 11-27-2012, 06:19 AM

Quote:

Originally Posted by Buehler445

Not necessarily. My person farm doesn't. Lots of schedule C type enterprises don't. Only if it is a separate entity.

What's a "person farm"? Is that like pizza on a plant?

Jenson71 · 11-27-2012, 07:17 AM

Quote:

Originally Posted by Saul Good

Yep. There's a word for what she is doing. It's called "quitting".

Quitting Advantage Plan. All the benefits of quitting, plus no monetary loss. Partner seems to want a pretty nice bailout.

**notorious** · 11-27-2012, 07:33 AM

Wait until after the tax year ends (one month away).

Liquidate, and buy back the items that you want at a reduced rate.

You are in the position of power. There is no such thing as "nice" in business, and chances are the relationship is already ruined anyway.

**Mr. Flopnuts** · 11-27-2012, 07:40 AM

Quote:

Originally Posted by notorious

Wait until after the tax year ends (one month away).

Liquidate, and buy back the items that you want at a reduced rate.

You are in the position of power. There is no such thing as "nice" in business, and chances are the relationship is already ruined anyway.

This is about all I've got in addition to what others have said. So, this!

11-26-2012, 10:45 PM
NewChief In Search of a Life Join Date: Aug 2001 Location: Fayetteville, AR Casino cash: $7200204	Buying out a Business Partner? Okay, My wife and her friend went into business together about 6 months ago. My wife supplied the design/buying/art, and the partner was supposed to handle the store front and books. The partnership has soured (I don't even want to go into it). The partner and her husband are moving to a different town and wanting us to buy them out of the business. They claim that they have $11,000 in it (which we don't believe). We also suspect that there has been quite a bit of freewheeling with the books and her "paying" herself when she claims she hasn't drawn a dime, saying she's only put more and more of her own money into the business (while not documenting the shit in any meaningful way). She says she wants their money back, and they'll be out. Here's the deal: The business hasn't made a profit yet. We're only 6 month in. Some options: 1) Pay them and be done, but saddle ourselves with more debt. 2) Try to value the business, looking at assets and such, then decide on a price to pay them. 3) Have a CPA (or someone) go over the books to try to give an accurate picture of what's gone wrong in the first six months. Then tell them to get bent because there was unethical shit occurring. Other ideas? I'm stressed as hell about this right now, and we plan on hiring a CPA once the partner is gone. The business model is solid, and sales are good. We just suspect that we're not doing well because of poor book keeping and money "leakages." We do feel like the business is a liability, and few investors in a business would expect to be able to get their full money back in 6 months of doing business.
Posts: 21,845

11-26-2012, 11:59 PM	#32
MOhillbilly Mama Tried Join Date: Dec 2002 Location: Missouri Casino cash: $9949903	Read the book Sammy the Bull put out. It's full of hostile takeover tactics. __________________ True Son of Liberty
Posts: 23,371

11-27-2012, 12:16 AM	#34
Simply Red You Sweetie! Join Date: Sep 2005 Casino cash: $2021206219 VARSITY	i think you should ask PostalChief.
Posts: 71,691

11-27-2012, 12:20 AM	#35
Phobia Guest Casino cash: $	Heh. I realize my math was hasty (and backwards) but the point was that the business is not profitable. Zero x 2 is still zero.
Posts: n/a

11-27-2012, 12:26 AM	#36
HayWire Retired Bearcat Join Date: Dec 2011 Location: SWMO Casino cash: $4532400	Seperate yourself, have an independant consultant look over the financials, separte yourself, get advice from a proffesional in the field, seperate yourself, go over results from the financials/professional. It's business, shit happens.......get professional advice and make a decision from there.
Posts: 7,587

11-27-2012, 12:32 AM	#37
BossChief SuperBowl or bust Join Date: Dec 2008 Location: BF Iowa Casino cash: $-1695912	Make 3 investments A match 3 gallons of gas An insurance policy __________________ Dreams do come true... http://www.chiefsplanet.com/BB/showp...postcount=1407
Posts: 47,901

11-27-2012, 12:39 AM	#38
Simply Red You Sweetie! Join Date: Sep 2005 Casino cash: $2021206219 VARSITY	I'd definitely consider murder here. Do you have a chainsaw NewChief?
Posts: 71,691

11-27-2012, 12:39 AM	#39
Buehler445 Supporter Join Date: Apr 2007 Location: Scott City KS Casino cash: $-1535266	If it were me I'd offer what you think you can make work. If that's $14, offer $14. If they don't want it, liquidate. You can always start your own business. That's basically what you're doing anyway. Unless it is a legal entity and the name is filed with the state, you can even use the name. Operate it like a business, don't get married to it.
Posts: 59,987

11-27-2012, 07:33 AM	#44
notorious Supporter Join Date: May 2005 Location: Who knows? Casino cash: $-914116	Wait until after the tax year ends (one month away). Liquidate, and buy back the items that you want at a reduced rate. You are in the position of power. There is no such thing as "nice" in business, and chances are the relationship is already ruined anyway.
Posts: 88,575