How do I approach my business partner (now retired but remains a shareholder) that I wish to buy you out?
Answer:
It would depend on who holds the majority of the partnership. If it is an equal partnership I would invite your partner to a setting that you will both be comfortable in. A non threatening environment would be best so he doesn't feel as if he is being ambushed.
Tell you partner that since he is retired you would like to buy him out at this time so you can seek an active partner. Explain to him the reasons that you would like to buy his holdings. If it is a profitable cooperation he may bulk at the idea if this is his only source of income.
If he refuses to let you buy him out ask him to buy you out so you can take the funds and start up another company. By doing this he should be able to see that you are serious in your decision. Also by him being retired from the business that shows that his interest in the company is at a minimum, unless he was forced to retire for health reasons.
I would certainly play the angel that you want an active partner and not a silent one.
If he refuses to buy you out you can always go to court and get a dissolution. I am sure that you guys are friends, but the fact of the matter is that friendship and business never mix in the long run for reasons such as this.
Good Luck!
Obviously the specific approach will depend on your relationship. However, forget the subtle messages delivered over a period of time. Set some time aside and put the whole case to him/her as an option. He/she very likely to reject at first pass but if all the info has been presented calmly and professionally you have a chance of getting this done amicably.
- why now?
- what's in it for you?
- what does it mean for him/her?
- walk through the evaluation of the buy out price.
- what does his/her refusal mean for the business as a whole
- discuss options
Fair price should be a win-win. You are going to be the long term beneficiary of the business. If you are clear that your partner is better of retired, focus on his retirement needs, and be liberal in your compensation, within the limitations of the deal structure.Also keep him on board as advisor without financial impact to give him ego satisfaction.
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