Some questions about my business partnership and maybe how to get out..??

[angelleye]

Missouri / Illinois

I've got some questions about my current situation that I'm kicking myself for being in. Long story short, I'm not very pleased with my current business partnership. I developed a product and needed money to get it launched. I didn't have the cash so I partnered with somebody on it and we're now 50/50. His initial $25k was to match my initial development time to make us 50/50. Since then it's been all me and he really should have just been an investor.

I've been thinking about putting some more money into the business to get some stuff done, but I don't think my partner is going to have money to match. How does that work? Would we restructure our contract so that I'm more than a 50% partner? If so, I'd have the nod in the company, right..??

Any information on this situation would be greatly appreciated. I'm mostly just curious how the extra investments in the company would work but any info on the rest would be great too.

Thanks!

 

[justalayman]

well, you could agree that your added investment would give you a greater control or if not agreed upon, your investment could be seen simply as an investment and not add any more ownership of the company.

You could also offer to buy your partner out.

 

[angelleye]

Hi, thanks.

I have offered to give him back his initial investment as a buyout but he doesn't want it. Also, when I really think about that I don't know that would be necessary as my development was to match his initial investment so we should be equal there. So I think a buy-out would actually involve whatever we come up with as our current business value plus some sort of projected profit over the next year or two..??? That's what I'm asking. Not sure how that type of thing work in the first place, but again, he's not really up for that anyway.

So the primary thing is that I've got this money I want to invest and I have no idea how I would do that. You say just invest it and don't change the ownership. How does that work? My investment contract would just guarantee me a percentage of interest or something and pay me back within a certain time?

The secondary thought, though...would I indeed have the power to require him to match my investment?

 

[justalayman]

The secondary thought, though...would I indeed have the power to require him to match my investment?

bottom line;

if you have agreed to equal partnership, neither of you has the power to force the other to do anything, including selling their share to the other. As partners, all actions would have to be agreed upon for the "company" to take such action.

as to your money; if he would agree that your added investment would increase your share of the company, that would be fine. If he would not agree to that, then your investment would be just an investment just like if you owned none of the company where any repayment would most likely be a simple contracted repayment of as with many investments, a promise of a return based upon the company attaining certain criteria.


the problem is; do you have the ability to unilaterally bind the company to any such agreements. If not, then the both of you would have to agree to the situation.