Seeking advices on my situation

Hi all

I am a newbie here and genuinely seeking advices.

Earlier this year I formed a partnership with a long term friend, S as a Unit Trust in purchasing a Business. Unfortunately soon after we took over the business I realized he is not suitable for this business at all.

To cut it short, I offered S the following options:

1. He withdraws from day to day business operation and becomes an investor. I will charge less hourly rate than his.
2. He sells his share to me at original price and I bear business purchase costs, which means he wouldn’t lose money.
3. He buys my share out after costs deduction. I wouldn’t mind losing some money.
4. We sell the business to someone else. This is the worst option though.

My concern is if he doesn’t agree any of the above, what would be my options then?

Thanks and happy new year!

 

welcome to InvestChat ,

some interesting options you have given the partner

i gather since the partnership is with a long term friend you wish to avoid litigation ( probably a mediated settlement )

is there a piece of the business , your partner is good at ( that actually helps the business improve ) maybe you could delegate that niche to your partner ( say sales , logistics ... advertising etc. )

i hope some other members jump in with some wisdom ( i normally went as a sole operator or sub-contractor )

cheers

 

Sounds like it is not a partnership.
A unit trust is operating a business and you might each hold units in the unit trust?

You can buy the units from S or S could buy your's. Do you have a unit holder agreement? You could sell your units to someone else and so could S.

The trustee could sell the business

How was the trust funded?

 

I think a key factor is whether S agrees with your assessment or not.

If he thinks he's brilliant for the business, then it could be very tricky to come out of this with your friendship in tact.

But if he agrees he's out of his depth, then you have another option -- that he stays as a shareholder, has a vote in controlling the business, takes a share of the profits, and exerts absolutely no effort in return for these things.

Might sound pretty unattractive, but this is exactly the relationship I have with BHP (et al). I never take a turn driving the bulldozer, they never ask me what colour I'd like the new dump truck to be, and the amount they pay themselves seems excessive but I guess I'm ok with it.

It's also the relationship I had with the two other shareholders in my business for over 20 years. It's fine, once you decide not to let it bug you, and as long as they don't get annoyed that you're being paid for your time.

 

Thank you all for your input!

S agreed to transit to a silent investor and he has already been reducing hours. I guess he learnt a good lesson in a hard way that this job is not really for him.

Probably this is the best outcome at this stage, not exactly what I expected in the first place... I was planning my semi retirement but now I am still working like a dog.. can’t complain too much as I do enjoy working... hopefully one one year or two I can work only a few days a week.