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MenuHow to leave a company and get what you deserve?
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I am not an attorney and this is not "professional advice."
Consult a lawyer.
If you get involved with a partnership ever again, get an operating agreement in place and TALK ABOUT SEPARATING at the beginning. Get it figured out immediately. Be up front with it: "We should talk about what happens if one of us dies. Or wants to move on." It's not offensive, or confidence-gutting...it's smart (as you probably now see.)
Generally speaking, an agreed-upon independent third party firm would assess the value of the company. This firm would be named in the operating agreement provisions so there wouldn't be bickering at the time of separation.
Another typical provision is that partners have first right of refusal on share sales.
But since you don't seem to have such an agreement in place, it's probably going to be tough for you now. The more you fight the more the other shareholder is going to fight back.
Consult an attorney. Find out if there are any restrictions on selling your shares.
My guess is that with a negative cash position due to debt, the company isn't worth a whole lot. You may be able to have a value assessed based on revenue...but if you leave, how much of that goes with you? Is the business model based on repeat customers, or one-time sales? You need more expertise than a Clarity answer to solve this one.
And remember, the more mean-spirited you approach this question, the more resistance you will get.
My opinion--which again is not "professional advice" and is merely for discussion--is for you to quietly discover your options by consulting an attorney and accountant good at digital business evaluation (most are not), and wait for the company to return to profitability.
Terribly sorry to hear of the division between yourself and your co-founder/partner. I've experienced an ugly split with a partner and it's not a fun time. I'm not certain if you have a corporate attorney or not but it would be wise for the both of you to have a chat with him/her. My concern for you would be the debt (specifically to the government). As 50% owner of the firm, you are "on the hook," so to speak, and with the growing dissension between yourself and your partner, I'm inclined to believe that's a sour situation that could very quickly turn sour. If you truly want out, and this is just my opinion, I would check your Buy/Sell Agreement and strongly consider selling back your shares of the firm. Please do yourself a favor and speak with your attorney before this gets ugly.
I am involved in a similar action currently. I am negotiating a severance package (actually litigating it because the investors simply chose to not honor it).
Relationships change all the time. Divorce in business is common. First issue is to make this simply a business deal. The disagreement about the way the business has been run and, you will be aware, "borderline illegal" is 1) borderline, 2) difficult to prove, and 3) not relevant to the discussion since you just want to move on while retaining your ownership.
Key here is to keep your emotions in check and to manage the emotions of your co founder. Nobody wants a business to fall apart so make that clear. You wish them total success and cheer for them in the future.
Yes, 6 months is reasonable. They may want (you should check your corporate documents) to buy your shares back. If so, there should be a process there. You will need to have confidentiality agreements and non-competes for a period of 12 to 24 months, or as long as you are a significant shareholder.
The best advice is to tell your partner that you have come to this "difficult" decision, do not make it about him or his processes, and say "this is what I would like to do". Do not threaten or belittle anything and it goes faster, farther, and at lower cost.
You can email me at Dane@DaneMadsen.com or call me in Seattle at 206.900.5852 and I can share some thoughts.
Dane
Related Questions
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How can one file an EIN without an SSN/ITIN?
You should retain a lawyer, or another qualified individual, to act as the third party designee for the corporation (if you do not have a partner or co-owner who is a US citizen). The designee should prepare Form SS-4 (Application for Employer Identification Number) and Form 8821 (Tax Information Authorization) for the corporation’s president to sign and return.MM
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If I have 51 percent and my partner has 49 percent of our company, what real decision making authority would I have?
On paper you have the advantage but after several startups control resides in he who knows how to execute the vision of the company.HJ
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Probably not the answer you're looking for, but companies have so many unimplemented ideas that the likelihood of partnering to implement someone else's idea is really low. And besides which, the idea is not something that has much value in and of itself. If you're passionate in the idea, build it yourself. That's the only way you can have leverage.TW
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I have this social media idea,but no coding skills. How do I get someone to do the coding (cant afford to pay them) and not give away half of my idea?
Dilip was very kind in his response. My answer might be a bit on the "tough love" side. But that's for you to decide. My intention, just for the record, is to help you (and those like you) on your path to success. And that starts with having a viable philosophy about entrepreneurial-ism and business. And I'm going to answer this because I get asked some form / version of this question very frequently from newcomers to entrepreneurial-ism. The scenario goes something like this: "I have a great idea. It's amazing, I love it, and I just KNOW it's gonna make me a ton of money. But I have no money right now so I can't afford to (fill in the blank with things like "to build it / create it / market it / etc" or "to hire the required staff needed to work in my business to sell it / develop it / etc"). And I don't want to tell anyone about my great idea because I'm worried someone will steal it and make MY million / billion dollars. But I can't afford to legally protect it either... So how do I launch without the skills to personally create the product AND no money to hire anyone else to do that either??" The answer is ... You don't. Look - let's be honest. All you have is an idea. Big deal. Really. I'm not saying it's not a good idea. I'm not saying that if properly executed it couldn't make you a million / billion dollars... But an idea is NOT a business. Nor is it an asset. Until you do some (very important) initial work - like creating a business model, doing customer development, creating a MVP, etc - all you really have is a dream. Right now your choices are: 1. Find someone with the skills or the money to develop your idea and sell them on WHY they should invest in you. And yes, this will mean giving up either a portion of the "ownership" or of future income or equity. And the more risk they have to take - the more equity they will want (and quite frankly be entitled to). 2. Learn how to code and build it yourself. MANY entrepreneurs without financial resources are still resourceful. They develop the skills needed to create what they don't have the money to pay someone else to do. 3. Get some cash so you can pay someone to do the coding. You'll probably have to have some knowledge of coding to direct the architecture of your idea. So you will likely still have to become knowledgeable even if its not you personally doing the coding. (This is not meant to be a comprehensive list of options... And I'm sure some of the other experts here on Clarity have others to add - and I hope they do) To wrap up - Here's my final tip to you that I hope you "get"... It's FAR more valuable to have an idea that a very specific hungry crowd is clamoring for right now - One that THEY would love and pay you for right now - Maybe even one they'd pre-order because they just have to have it - Versus YOU being in love with your own idea. [Notice I didn't say "an idea that some as-of-yet-undetermined market would probably love"] I wish you the best of luck moving forward.DB
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What companies have successfully implemented both B2B and B2C products or services? Which should I start with for the non-profit sector?
I would suggest the first question to ask is "what problem do I solve?" And of those people I solve problems for "who do I create the most value for?" In the non-profit world you need to add "How does my business help the non-profit run better and/or help the group the non-profit focuses on?" For example, if you've created a platform that drives donations, your company "has created a platform that helps you reach fundraising goals faster." What you don't want to do is market and sell to B2B and B2C audiences simultaneously. They have different ways of buying - a B2B audience needs to have their benefits quantified (using your thing makes me x amount more) - and it's extremely hard for a startup to be able to do both well. Better to start with one, execute really well and move into the other. Feel free to give me a call and we can dig into who your most valuable audience is.AV
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