Need a Way Out of Your Business Partnership? Ask Madeleine

Hello Madeleine,

I have read your articles, and I wanted to reach out to you.

I have an equal business partner with whom I have successfully run a restaurant for six years. While I have 30 years of experience in the industry, my business partner had no previous knowledge about restaurant operations. I have used my expertise to elevate our restaurant to a high level.

The reason I am contacting you is to seek advice on how to end this partnership. I would like to either buy him out or have him buy me out. I have made this offer to him but he has not accepted either option.

My desire to end the partnership stems from his wealthy background, which has led him to expect me to work harder to generate more profit for him. He frequently complains about the restaurant’s profits, yet contributes nothing to its success. He has a dominant personality that can sometimes be narcissistic, and he often threatens to dissolve the company. He also brings up the need for expensive lawyers to discuss potential agreements, but my goal is simply to have him leave or to receive compensation so I can move on.

I hope to get your guidance on how to make the best decision in this situation.

Aggrieved Partner

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Dear Aggrieved Partner,

I am sorry for your tribulations. This is a tough one. I wish I could wave a magic wand, send you back six years, and have the two of you map out clear agreements about not only what each person would be expected to contribute to the partnership but also how to manage an exit plan.

Since we can’t go back in time, you are stuck with a situation in which you are dealing with uncomfortable conflict and could potentially lose a lot. What agreements did you sign when you first conceived the idea of a partnership? Might you have something in writing? It seems like you brought the experience and the sweat equity while he provided the seed money. How have you been sharing whatever profit gets generated? You say he threatens to dissolve the company—do you have any ownership stake or power at all?

First things first. You must figure out what matters most to you. Is it winning? Is it punishing your partner for being such a jerk? Or is it more important to get out of this partnership with your sanity and reputation intact, or maybe just find a way to reduce your stress? Once you work this out, you will have a clearer picture of how to proceed.

Here are some options for you to consider:

• Check the laws in your country about business ownership. Consult a lawyer of your own to see what rights you have based on whatever agreements do exist.
• There is something going on that the two of you are not talking about. It seems that your partner (term used loosely) is avoiding the topic of bringing the partnership to a close. Is he perhaps more attached to the business than you realize? There might be some emotional reason that he goes immediately on the defensive when you bring up the topic. The question to your partner might be: “It seems you are unhappy with my ability to generate profit, so I am curious as to why you seem unwilling to dissolve the partnership.”

The more you can communicate with each other, the more likely you will come to some resolution. For this to happen, I will draw your attention to your own grievances against your partner. I am not saying you are wrong about him, but I do think your harsh judgment of him—no doubt formed over years of experience—is almost certainly bleeding into the way you communicate with him. That can’t help matters. Try to remember the way you behaved with your partner when things were first starting and you held him in higher regard. Do your best to shelve your criticisms, well founded as they may be, and change the way you treat your partner. You may think you are good at hiding your opinions, but I guarantee he is feeling them. No one wants to negotiate with someone who hates them.

• It sounds like your partner is distracted and wishes to maintain status quo. If you are desperate enough to poke the bear, make it real to your partner. Prepare two options for him in writing: First option: He sells you his share of the business for what you think it is worth based on the initial investment. Perhaps lay out a scenario in which you buy him out and pay him a set amount over time. Second option: You offer to sell him your share of the business, outlining the value of your sweat equity and what you think that is worth.

Get a lawyer to help you prepare the documents so that they are properly constructed. Your partner might be impatient and annoyed enough to just move ahead and sign one option or the other. Until you do that, he probably won’t take you seriously.

• I hate to say this, but if you feel strongly enough about getting out, you may just have to walk away. Everybody in town is probably aware that you are the heart and soul of the restaurant and the one who has made it a thriving concern. There is a very good chance, based on your reputation, that you will find someone who is willing to invest in you again. If there are no legal documents spelling out the agreements, you might be able to find a way to generate a new opportunity for yourself and simply—leave. If there are no agreements in place, there is nothing any lawyer can do about it, no matter how well compensated they are.
• The last option I can think of is to find a way to focus on what is working. Park your judgment, let your partner’s behavior roll off your back, and enjoy the good thing you have created.

I am truly sorry, Aggrieved Partner, for your situation. Business partnerships are notoriously fraught under the best of circumstances. They are similar to marriages in that no one wants to consider that they might end, and very few prepare well for that possibility. This one is not unlike a marriage in which no pre-nuptial agreement was negotiated. I suspect you will never make that mistake again. I have seen people simply tolerate terrible partners because the pain and loss of dissolving the partnership (or marriage, for that matter) far outweighs the benefits in the long run.

Once you know what is most important to you, you will know what to do.

Love, Madeleine