Uk Small business deadlock
Discussion
Hi there. I am in business with a long term colleague. We did a mbo. Paid 50 quid each for shares with the purchase price for business paid out of the company over the next 10 years.
Heres the catch. My business partner feels my role isnt enough for my salary/title. My role has mostly come about by decisions he has made. I put effort in but he perceives his role is more important.
The company has had year end and has made a small loss. But does pay its way without bank help/loans just the main capital loan.
We had a chat and he is basically saying he can make a go of it running it on his own (with me staying as employee on decent salary) but handing him all my shares.
What do you think. Part of me wants to work a deal out where i give some shares and stay but another thinks sod it and ask him to buy my shares if i walk away completely. He would be able to buy them over a period of 6 years with my salary if he paid in installments say monthly. Can shares be bought paying monthly out of the company?? If so who would the shares belong to? The company? Or my business partner? Help would be appreciated
Heres the catch. My business partner feels my role isnt enough for my salary/title. My role has mostly come about by decisions he has made. I put effort in but he perceives his role is more important.
The company has had year end and has made a small loss. But does pay its way without bank help/loans just the main capital loan.
We had a chat and he is basically saying he can make a go of it running it on his own (with me staying as employee on decent salary) but handing him all my shares.
What do you think. Part of me wants to work a deal out where i give some shares and stay but another thinks sod it and ask him to buy my shares if i walk away completely. He would be able to buy them over a period of 6 years with my salary if he paid in installments say monthly. Can shares be bought paying monthly out of the company?? If so who would the shares belong to? The company? Or my business partner? Help would be appreciated
A potential minefield. TBH I'd be tempted to let him buy you out then leave. If the business is only just ticking over, or running at a small loss then it doesn't look good for the future. One small mishap, missed order or sudden lull and the company sounds like it would be in trouble. Leave after selling him your share IMO.
Ask him how much he wants to pay. Whatever he says double it and negotiate from there. Will never work out long term if he doesn't respect your contribution w while it's a small business.
Sounds like professional Corporate Finance advice will be too expensive for your small business. Buy some good business valuation books from Amazon, work out a value that feels right to both of you (or to paraphrase a well known quote, "the art of negotiation is that both parties end up unhappy" i.e. one feels they paid too much and the other feels they didn't receive enough.
Sounds like professional Corporate Finance advice will be too expensive for your small business. Buy some good business valuation books from Amazon, work out a value that feels right to both of you (or to paraphrase a well known quote, "the art of negotiation is that both parties end up unhappy" i.e. one feels they paid too much and the other feels they didn't receive enough.
Needhelpplease said:
Heres the catch. My business partner feels my role isnt enough for my salary/title. My role has mostly come about by decisions he has made. I put effort in but he perceives his role is more important.
If his decisions are defining your role, then it sounds as if he might be right - you are a junior partner.Needhelpplease said:
We had a chat and he is basically saying he can make a go of it running it on his own (with me staying as employee on decent salary) but handing him all my shares.
<raises eyebrow> Who owns the shares makes no difference to whether he can make a go of it or not, nor does whether you're a director/partner or an employee.He's making a power grab.
I wonder if he's got a business sale in mind?
Needhelpplease said:
What do you think. Part of me wants to work a deal out where i give some shares and stay but another thinks sod it and ask him to buy my shares if i walk away completely. He would be able to buy them over a period of 6 years with my salary if he paid in installments say monthly. Can shares be bought paying monthly out of the company?? If so who would the shares belong to? The company? Or my business partner? Help would be appreciated
They belong to you, right up until you sign them over to him - then they're his. How he pays you for them makes no difference to that - that's a simple question of him owing you money.Stepping back a bit, whats the actual current deal because it sounds to have potential issues to me.
You did a buy out and are paying for it out of the company for the next 10 yrs?
Do you personally have a debt which is being paid for out of dividends? What happens if the company folds?
I think you really need to be clear about the current set up before you start worrying about changes.
You did a buy out and are paying for it out of the company for the next 10 yrs?
Do you personally have a debt which is being paid for out of dividends? What happens if the company folds?
I think you really need to be clear about the current set up before you start worrying about changes.
presumably if you paid £50 each you now own 50% each of the shares?
In which case you are equal partners and deadlock is very likely
there are lots of options from refusing to do anything (you are equal shareholders) to keeping your shares as they are but adjusting roles and salary, to selling to him, to his selling to you...
difficult to advise without knowing more detail / likely profit of the company / assets / salaries / your desires / etc.
In which case you are equal partners and deadlock is very likely
there are lots of options from refusing to do anything (you are equal shareholders) to keeping your shares as they are but adjusting roles and salary, to selling to him, to his selling to you...
difficult to advise without knowing more detail / likely profit of the company / assets / salaries / your desires / etc.
TooLateForAName said:
Stepping back a bit, whats the actual current deal because it sounds to have potential issues to me.
You did a buy out and are paying for it out of the company for the next 10 yrs?
Do you personally have a debt which is being paid for out of dividends? What happens if the company folds?
I think you really need to be clear about the current set up before you start worrying about changes.
Yeah, the whole thing sounds bizarre. Who sells a business and then asks for the money over 10 years?You did a buy out and are paying for it out of the company for the next 10 yrs?
Do you personally have a debt which is being paid for out of dividends? What happens if the company folds?
I think you really need to be clear about the current set up before you start worrying about changes.
southendpier said:
Yeah, the whole thing sounds bizarre. Who sells a business and then asks for the money over 10 years?
not all that unusual in an MBOmaybe owner wishes to retire - allows the management to buy the business but pay out of the profits they make for the next 10 years - think of it as a business where when the owner gets out the business is no value to anyone else without the management team - so not saleable in a normal way, but allows some income to carry on while the owner can go and play golf!
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