Hello redditors I do a lot of reading but never post, and it just so happens I over looked going 50/50 with a friend that is going horribly wrong and I’m not sure how to proceed, backstory about 6 months ago me and a old friend were hanging out and I popped a idea into the air for opening a company mainly just throwing it out to see if he would think it would work come to my surprise he wanted in on the buisness but didn’t have funding and said he would (as I’m sure you can guess that never happened) he has no experience with computers but he is a solid how do you say? Worker bee, he can do one task at a time and does nothing in his free time, I’ve handled import of inventory, funding, SEO and sale streams, and I also handle the physical side with him of moving and making inventory (manufacturing) but now we’re at the point of scaling and it’s time for us to put our money together to get large inventory’s sent into (Amazon) and come to find out he just had his car repod, has no money from the money we made from the company already, now I’m sitting here asking why the hell did I put myself in this situation, we have no formal operating agreement (I know, another rookie mistake) I have brought up previously that the work flow was VERY uneven I’m working circles around him day and night and I’m im burnt out, I brought this up to him this morning and I brought up the fact I want to buy out because it’s been 6 months of the same thing with no changes, his response was a outrageous number for buy out and him proceeding to yell at me saying he works more (I can assure you that is 100% not the case) being as I pay the rent completely for the spot we use to manufacture as well as what was stated above. My worry that out of spite he won’t come to a resolution and force me to dissolve?
What should I do in this situation? he won’t pay for mediation or arbitration and I am done letting him leech off what I built, What do I do???
PS I’ll never do a 50/50 again
At this point, you have a good handle on your options.
I went through a break-up of an equal 3-Partner LLC, however we all had put in same money/work and it was still a shit show.
At this point, you need a strategy to proceed. My approach would be, time to play a little hardball and some poker at the same time, meaning you have to be tough, may have to bluff and definitely need to embellish along the way.
Sit down face to face and state the following:
We must end this partnership now.
I’ve hired an attorney.
Between startup money, rent and supplies and equipment totaling ~$12k, Florida’s laws heavily support me.
My options are to 1.) Sue you to remove you from the corporation or 2.) Fold the company in which I retain the assets to offset my $12k.
How would you like to proceed?
Don’t get into any discussion over the 5 points you state. He will want to because he will be in disagreement. Bite your tongue, bite your lip, bite anything to not say a word other than the next question.
There’s a 3rd option on #4 which is for you to buy him out. Don’t offer that option, let him bring it up. If he does, keep your response short and direct (have an amount in mind) "I may consider that if it’s mutually fair. How much? "
Don’t offer the first amount! You don’t want to compete against yourself.
If his offer is stupidly high, just tell him; No thanks, we’re too far apart to even negotiate. I’ll get back to you after I speak to my attorney about my best alternate options.
If his number is high, let’s say $20k but something you think you could negotiate with, say: “I feel like we’re very far apart. I’m at $5k.”
Obviously, if you come to an agreement it you must create a legal document. You should have appropriate legal verbiage that the agreed upon amount between both parties is final and neither party shall have any additional claims against the other whatsoever. You both date and sign.
If you decide to buy him out, I recommend monthly payments 12 or 24 months depending on the amount for the benefit of preserving your cash flow. As much as you want him out of your life, don’t hurt your cash-flow.
If you decide to form a new business entity and start to shift assets to the new entity, once the current website is abandoned, you can claim it. You can also modify your business registration and claim the current company name and use it as a DBA.
Feel free to DM me with any questions.
Good luck.
Thank you very much! I’m going to plan a meeting with him this afternoon to get things in motion with him and my attorney, I also didn’t know I could pay based on a 12-24 months period. (also something I’ll ask my attorney about.
Yesterday I wrote out a buy out agreement with some extra verbiage almost like a no contest with extras? Waiting for the attorney to wake up and let me know if it’s okay.
Just so I have that so the problem can be resolved same day.
Thank you a ton! For the taking the time to write that out I for sure have a great direction now and I’ll make sure to come back and update the post with more information tonight!
My pleasure.
Good luck, and don’t forget to keep your side of the dialog short and simple.
“Less is more.”