A business partnership could last a lifetime or may only last for a few months before things turn sour. Whether you have spent decades running a business together and now have differing opinions about its future or you have just started the business and don’t work well together, you may need to buy out your business partner.
Buying your partner out allows you to keep the company operating despite the conflict between you and the other owner. They receive a fair value for their share of the business, and you get to continue running the company.
Buying out a partner can be a complex process, but taking the right steps will increase your chances of success.
Step one: Go over your partnership agreement
Discussing what will happen to the business or the circumstances in which one partner can buy out the other is a common inclusion in partnership agreements.
The longer it has been since you signed your contract with your business partner, the more likely it is that you may have forgotten important details within it. Going over your partnership agreement will help ensure that you meet all of the criteria in your contract for a buyout.
Step two: Put an appropriate price on the business
Once you know what obligations you have to your partner under your contract with them, you can then start to address the practical details of a buyout.
You obviously can’t offer a fair price for an asset if you don’t know its current worth. A thorough business valuation looking at your current assets and liabilities can help you determine what a reasonable offer for your partner’s share of the business would be.
Step three: Find a way to make your offer attractive to your partner
The longer you have done business with someone, the better you understand their personal preferences and negotiating style. You can use that information to help you make your bio offer as attractive as possible to your partner. Including the right terms can help you successfully negotiate a buyout without permanently damaging your relationship with your partner.
Thinking ahead can help you take the right steps when partnership disputes make you decide to buy out your partner to assume sole control over your shared business.