forced to sell business
Discussion
Four years ago I went into partnership with an old school friend and set-up a business which has a high turnover, good profits and no debts. We own all our own stock (70k) and have 6 employees, 1 full-time and 5 part-time.
Two years ago my partner went on trial for an offence which he'd committed several years previously, something that had absolutely nothing to do with this business or myself. After a long trial he was sentenced to 8 years in prison. Since he's been inside I have run the business as my own but have given him (his wife) a decent wage every month, to date this amounts to about £35,000.
He has now decided that he needs to sell his half to pay for his compensation order yet despite me making a very fair offer to buy him out, based on 2 independent valuations, he has declined my offer and is threatening to put the whole business up for sale.
I have taken legal advice and was told not to worry as he can't do this, however I'm not so sure that my solicitor is right. Has anyone here ever been in a similar situation?
Two years ago my partner went on trial for an offence which he'd committed several years previously, something that had absolutely nothing to do with this business or myself. After a long trial he was sentenced to 8 years in prison. Since he's been inside I have run the business as my own but have given him (his wife) a decent wage every month, to date this amounts to about £35,000.
He has now decided that he needs to sell his half to pay for his compensation order yet despite me making a very fair offer to buy him out, based on 2 independent valuations, he has declined my offer and is threatening to put the whole business up for sale.
I have taken legal advice and was told not to worry as he can't do this, however I'm not so sure that my solicitor is right. Has anyone here ever been in a similar situation?
I think it will depend on your articles of association. My business partner had a similar problem in a previous business. When we combined forces, he was very keen to develop these articles. It seemed a bit alien to me at the time, but as time has gone on it makes more and more sense.
So, over to you, what's in them, and is he allowed to do this?
If no articles, I would imagine you have first 'dibs' on the business, as long as a price can be agreed, but this will be subject to legal opinion I would imagine, and we're all a little bit worse off with that.
Bit of a bugger though, and I suspect a lot of heartache and pain to come.
Best of luck.
So, over to you, what's in them, and is he allowed to do this?
If no articles, I would imagine you have first 'dibs' on the business, as long as a price can be agreed, but this will be subject to legal opinion I would imagine, and we're all a little bit worse off with that.
Bit of a bugger though, and I suspect a lot of heartache and pain to come.
Best of luck.
Dont forget that you are the business and are completely in the driving seat.
How your other shareholder thinks he can market, accept offers, do dd and complete whilst in prison is beyond me.
Someone needs to explain to him that every penny they get from or for the business the moment they went inside they should be very apreciative of.
How your other shareholder thinks he can market, accept offers, do dd and complete whilst in prison is beyond me.
Someone needs to explain to him that every penny they get from or for the business the moment they went inside they should be very apreciative of.
When you say you're in partnership, is it a true partnership or are you shareholders of a LTD company, in which case what is the shareholding split?
Do you have any kind of partnership / shareholders agreement?
You say that you're giving his wife "decent wage every month" - how is this paid? Salary, Dividend, share of partnership profit? Is she making any contribution to the business to earn this commercially?
If you can answer those questions, it will be easier to provide further advice.
Do you have any kind of partnership / shareholders agreement?
You say that you're giving his wife "decent wage every month" - how is this paid? Salary, Dividend, share of partnership profit? Is she making any contribution to the business to earn this commercially?
If you can answer those questions, it will be easier to provide further advice.
Thurbs said:
Dont forget that you are the business and are completely in the driving seat.
How your other shareholder thinks he can market, accept offers, do dd and complete whilst in prison is beyond me.
Someone needs to explain to him that every penny they get from or for the business the moment they went inside they should be very apreciative of.
All you need to know is right hereHow your other shareholder thinks he can market, accept offers, do dd and complete whilst in prison is beyond me.
Someone needs to explain to him that every penny they get from or for the business the moment they went inside they should be very apreciative of.
What is in your agreement and what form does it take?
Also, given he is being an ar*e, I would be looking at what the agreement says re: payment and seeing if the payments made can be deducted from any sums you would pay to him for purchasing his share...i.e. if you each must work specific hours and so on.
Also, given he is being an ar*e, I would be looking at what the agreement says re: payment and seeing if the payments made can be deducted from any sums you would pay to him for purchasing his share...i.e. if you each must work specific hours and so on.
Steve H said:
Sounds to me like you would be much better off out of the partnership anyway. I'd suggest you look at any non-compete agreements you've signed and if possible make your staff and customers an offer to come over to the new business you are setting up.
I'd be doing this 
He's already had £35k that he hasn't worked for, he should be grateful that he gets anything for his share. I'd be setting up on my own and taking everyone with me and then see how far he gets selling the business then...If by your comment:
"Since he's been inside I have run the business as my own but have given him (his wife) a decent wage every month, to date this amounts to about £35,000."
you mean you have been paying him (her) money for your sole efforts then my first, and immediate, step would be to stop paying the a
hole's wife for sitting on her arse doing fk all !
Might focus the prick's attention somewhat.
Second step would be to start a new business, if possible, and leave him with a valueless shell of a company.
"Since he's been inside I have run the business as my own but have given him (his wife) a decent wage every month, to date this amounts to about £35,000."
you mean you have been paying him (her) money for your sole efforts then my first, and immediate, step would be to stop paying the a
hole's wife for sitting on her arse doing fk all !Might focus the prick's attention somewhat.
Second step would be to start a new business, if possible, and leave him with a valueless shell of a company.
sgrimshaw said:
If by your comment:
"Since he's been inside I have run the business as my own but have given him (his wife) a decent wage every month, to date this amounts to about £35,000."
you mean you have been paying him (her) money for your sole efforts then my first, and immediate, step would be to stop paying the ahole's wife for sitting on her arse doing fk all !
Might focus the prick's attention somewhat.
Second step would be to start a new business, if possible, and leave him with a valueless shell of a company.
This."Since he's been inside I have run the business as my own but have given him (his wife) a decent wage every month, to date this amounts to about £35,000."
you mean you have been paying him (her) money for your sole efforts then my first, and immediate, step would be to stop paying the a
hole's wife for sitting on her arse doing fk all !Might focus the prick's attention somewhat.
Second step would be to start a new business, if possible, and leave him with a valueless shell of a company.
Stop being nice to someone who is being unreasonable. This will go sour. There's no point in it going sour and you being out of pocket.
If it were me after I'd been threatened with sale, I'd already be setting up my own new Ltd Co, and running down the stock in the old company to as low as possible, before closing the old partnership.
A difficult situation.
Would I be right in thinking :
A) you both own 50% of the business.
B) he wants an amount of money X.
C) you've offered to purchase his 50% for Y.
How far apart are X and Y?
I guess the difficulty is that it's not that he wants to be bought out but that he wants an amount of money and to get that amount of money he believes his stake in the company is worth all or most of it... I don't think he sees it this way.
If he doesn't think that your valuations are correct maybe ask him or his wife to get someone they appoint to value the business.
TBH I agree with most of the comments here, they're lucky to get anything, although if they own 50% of the shares they should get 50% of the dividends.
Would I be right in thinking :
A) you both own 50% of the business.
B) he wants an amount of money X.
C) you've offered to purchase his 50% for Y.
How far apart are X and Y?
I guess the difficulty is that it's not that he wants to be bought out but that he wants an amount of money and to get that amount of money he believes his stake in the company is worth all or most of it... I don't think he sees it this way.
If he doesn't think that your valuations are correct maybe ask him or his wife to get someone they appoint to value the business.
TBH I agree with most of the comments here, they're lucky to get anything, although if they own 50% of the shares they should get 50% of the dividends.
fatboynash said:
I have taken legal advice and was told not to worry as he can't do this, however I'm not so sure that my solicitor is right. Has anyone here ever been in a similar situation?
How on earth is he going to sell the business without your cooperation? You don't need a solicitor to tell you this.Just imagine it, he has a sign put up- business for sale. If you don't bother to take it down, someone comes in and asks about it and you tell then that the sign is a mistake and it's not for sale.
Same if it's an advert in a trade paper or on a businesses for sale website.
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