Forums: Discussions for entrepreneurs and small business.

I have a business partner in an LLC that I need to get rid of. This person bought into the company for approx. $16K. At the time we were bringing in as a start up approx. $150K per year (all my sales). He promised to bring in more business but through the course of five years we only grew my existing relationships. The company now brings in approx. $800K per year and we paid ourselves approx. $120K per year since 2005. He finally brought in a new customer but within four months of having them on a retainer he left and went to work with them and gave me no notice. Now he contacts all of our customers trying to sell his new products and make my existing company look bad. We have approx. $75K in debt that he mostly ran up and now since January of 2010 has not contributed at all to the company and doesn't help pay any of the debt. However he does expect me to keep paying for his vehicle and expenses associated with the vehicle since we agreed to have the company pay for them at one time. But that to me was while employed. I have 51% and he has 49%. Now he also hounds me for profit/money when we are actually starving for work. Is there any way I can give him the boot and revoke his ownership?

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Gary,

 

I assume you guys don't have any type of "buy/sell agreement". 

A good starting point is to sit down with him and tell him that you want to draft one.  Basically, you have to be willing to set a price for his half of the business.  Of course he will want that to be zillions of dollars, however, you have to establish up front that you want to be able to either sell your half, or buy his.  So, remind him when he sets his selling price, that he has to be willing to buy your half for same that he wants to sell his.   If his price is high, then just tell him you want to sell out to him.  It will bring his price down to a real figure.  I understand that you don't want to sell out to him, but the dialog will put him on notice that you aren't willing to continue status quo.  Chances are, he won't be agreeable to anything at this point because he figures he has you between a rock and hard place.

If he is stealing your customers I can't imagine you are sending him any money anyway, but if you are....stop.  He'll be real willing to negotiate when the checks quit coming....

Step 1.  You need to find a good business lawyer. With the current income you are generating, I suspect you must already have one, but if not, hire one today, he should be able to guide you through the process, and negotiate on your behalf.  The other thing the lawyer should be able to do is some sort of cease and desist if he is getting money from one company and raiding it to send business to another.  Does your state acknowledge Verbal Agreements/Contracts??

 

I would find the meanest nastiest lawyer you can find and put this bum in his place. A good attorney will write a few letters to your partner and his new employer and this could be over in a few weeks. Then you can get on with your life and write a newsletter for StartupNation about pardnerships.

Quit letting this go on. Get on with your life and business, life is too short.