What You Need to Know About Buying Out Your Business Partner
Eventually all business relationships come to an end. Businesses can break up for a wide variety of reasons; it may be that your business partner is retiring and leaving the field or it may simply be that you each have different visions for the future of the company. Regardless, when the time comes to end the relationship, you need to look out for the best interests of yourself and your company. If you have any questions about buyouts, partnership disputes or business dissolution, an experienced West Palm Beach business litigation attorney can help. Your attorney will assess your case and help you determine the best way to protect your company. In many cases, it makes sense to buy out the ownership stake of a business partner.
Four Key Steps for a Smooth Buyout
- Set Clear Terms from the Beginning
Buyouts, and all other questions of business dissolution, should be thoroughly addressed during the business formation stage. Buying out your business partner will be much easier if you have planned for this issue ahead of time. Ultimately, if a clear process has been established, the odds that a nasty dispute will arise will be dramatically reduced. A dispute in the buyout process could do long-term damage to your company. This needs to be avoided.
- Obtain a Business Valuation
At the end of the day, the price of your partner’s ownership stake in the company will likely be the most important sticking point. In order to facilitate a smooth buyout, a fair price must be determined. Generally, this is best achieved by obtaining a comprehensive business valuation. Remember, all assets and all liabilities need to be taken into consideration. After all, you do not want to be stuck overpaying.
- Find the Best Funding Option
You also need to ensure that you can find the best funding source to facilitate this buyout. While you may have enough liquid assets to get the deal done, many business owners do not. You may need to take out a small business loan. Alternatively, you may also be able to buyout your business partner using a mutually agreed upon payment plan. For many businesses, especially small businesses, this is the best option for all parties.
- Consult with an Attorney
Finally, it is a best practice to consult with an experienced attorney throughout the entirety of the business buyout process. It is important that you get things done correctly, both from a legal perspective and a financial perspective. Your attorney can help you negotiate terms that are in the best interests of you and your company. Further, your attorney will ensure that your buyout is made official in accordance with Florida law, and that all necessary documents and paperwork are properly completed and filed with the appropriate parties.
Do You Need Business Litigation Assistance?
At Pike & Lustig, LLP, we have helped many businesses through disputes and litigation. If you have any questions about buying out a business partner, or if you are involved in any type of business-related lawsuit, please give our team a call today at 561-291-8298. We offer fully confidential case evaluations, free of charge. Our firm proudly represents businesses throughout the West Palm Beach region, including in Miami and Fort Lauderdale.