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Partnership Issues

    • 7 posts
    March 15, 2014 9:04 AM EDT

    This is my second startup business - first was successful. The partner I had in the last one brought in his brother for the next one. So there is three of us. Me and two brothers. Equal money in. I had the foresight to formulate an operating agreement with a lawyer and the three of us. Two issues were raised in front of the lawyer: 1.) Brothers steam rolling non-family (i.e. me) and 2) I personally was not going to go full time and one brother (my friend) was only going to be part time and the last brother was going to be full time. The lawyer wrote up the agreement to protect me (unanimous vote to get anyone out) and put stiuplations in there that we all agreed with that: equal equity protected, inequality in labor propery compensated for with payroll. Everyone was happy and signed, sealed, delivered.

     

    Fast forward 1 year. 15 days before our grand opening date the brother I don't know starts sending me harrassing emails about how useless I am and he wants to buy my shares out and he has investors, etc. His brother, my friend was angry for being bypassed and for me being attacked.  The troublesome brother is pulling pieces out of context from the operating agreement and trying to make illogical cases to terminate the agreement and get me out. Turns out he is bi-polar (clinically medicated) and drinks. I did not know this going in - my fault. We tried negotiating many times. We thought we got to his issues which were labor inequality and startup business not having enough cash flow to pay proper compensation to those laboring. So we agreed that those who couldnt put in their fair share (me and his brother in volume of hours) would keep their fair share in the bank by being docked the difference from any future owner's distributions accordingly. Again everyone was happy and signed sealed delivered.

     

    Now we have been open 100 days. We have been successful. Cash flow positive. Not enough to pay salaries yet, but I log my docked compensation from future pay outs if I dont put my minimum in week-by-week. I have a full time job, but my duties are mostly sales and marketing and financing/accounting and I have been successful doing that remotely. But It has started up again. People tell me bi-polar has cycles. They tell me when up, they think they are god and the rest of the earth is crap. They tell me when they are down the world is against them and screw everyone. I am once again getting several harrassing emails about buying me out. I am told very difficult to be bought out by someone who is bi-polar because they devalue your share and thing nothing can go wrong on their side. When we push the issues in in-person partner's meetings, he is anti-social, very agreeable to everything, and can't look us in the eyes or hold a conversation or express his opinion. We document and save all meeting minutes.

     

    Problem for me too is this is a successful business with huge return potentials, great cash flow and high margins. The brother that is my friend is stuck in the middle and not much help. But the troublesome brother continues to harrass me over email at night and started even making snipes at friends and family that tried helping us in teh business by finding fault with any thing possible. I have trouble maintaining my excitement and passion for the business when everything I do is visciously attacked by him (useless, half-arsed, your a hack, your stupid, hate your corporate BS, just go away, etc, etc). Again all over email between 12am-6am, never in person. 

     

    Advice on how to handle? The friend-brother is bringing in his father as mediator since his father is a successful entreprenuer and knows his son's issues. However, I am concerned that their family will protect their family. The operating agreement is air tight. My lawyer tells me unless they are willing to take me to court to force a business shut down, not much they can do. A forced court decision could hurt my ability to get my investment back depending on how long and bad it gets.  I am logging and journalling and saving everything. 

     

    I don't want out, but feel we can't be successful in this negative environment. If I do get out, how do I at least get my ROI? My money in plus third party valuation of the business? What if we can't come to agreement and they can't raise the money? It is convenient that the troublesome brother had no issues with my until we were through all teh difficult effort of opening (I wrote the business plan, got the financing, got us retail grants, networked with many that helped us open, did all the licensing, purchasing, legal/regulations, financing, and accounting). The brothers are engineers and primarily operations. 

     

    Looking for professional advice. 

     

    Odd-Man-Out

     

    • 2 posts
    June 11, 2014 10:31 PM EDT
    Always revert back to your operating agreement, and hire your own attorney to combat the harassment. You are protected, but his harassment needs to be stopped. good luck