Buying Out A Business Partner

Zikka

I am in business with my father and I set up a company 3 years ago. I included him when setting up the company as we had been in business before. We have a 50/50 shareholding in this company.

My problem is that the two other business I have been involved in with my father both failed. He does take over somewhat and I don't really like how the family relationship can be brought into business because he will always be the boss in a way, regardless of shareholding. With this particular business, I have been working in it entirely by myself and I have made a huge success out of it. My father takes the credit for it and I don't mind that too much but I would be much happier if I were not in his shadow all the time. I would like to buy out his share. Before broaching the subject with him I need to find out as much as I can about my options. I think he would be open enough to a buy out but I don't know how to value his share etc. If anybody knows anything about this I would really appreciate your advise!
Thanks!

EamonOSullivan

There are many aspects to this but it all boils down to how much you are prepared to give to your father for him to exit the business.

I suggest as a three step process you

1. Look at what other companies in your industry are valued at.
2. Estimate on that basis how much your fathers share is worth.
3. Agree some sort of schedule to pay him over - e.g. 2 to 3 years.

It sounds like you also need to get the family issues right as well, and these are probably more important in the longer run.

TheCostumeShop.ie: Ronan

I'd agree, just bring up the conversation in a casual way saying you would like to be out on your own a bit more. Suggest you would like to buy out his share (or go out on your own). Businesses are only based on what someone is willing to pay for them, so it really is up to you to come up with a figure that you are both agreeable with and paid out of future earnings so as to not cash strap the business if possible.

Zikka

Hey - thanks for the advice. Sorry about the gigantic delay in getting back! Wow - I was angry that day! So I have talked it out with him - amazing how much better you feel when you just put it all out on the table.

I was blaming my Dad for the other two businesses failing - terrible thing to do. I don't feel good about that. Markets died and we both didn't know how to handle it. It's because of what I learned from that, that I'm doing well now.

I won't be buying him out - I think it would ruin our relationship if I tried to go there. He wants to take a back seat anyway it turns out but I was stressed to the gills trying to manage it all myself so that's why he was starting to get stuck in.

Talking - it always fixes things!

Thanks again

BenEadir

Next time give www.smallbusinessadvice.ie a call. Its free & confidential.

Ben