Startups Stack Exchange Archive

Partnership ends

• posted by: Christine viau on 2016-12-12
• tagged: partnership
• score: 6

The Business started. I was just helping him wasn’t working and I had the time. He later gave me a notarized letter owning 40%. I worked with him, trying to build it for three years. All this time there was no money hardly anyway that is what I was told. Then I was busy selling puppies trying to make money somewhere, he got mad because I didn’t go when he called and told me to leave. We still talk and he’s says he had paper work looked at for the value, thinking of sale. Sent me a copy of the paper he received on value of business and it shows almost $100,000 over those three years profit. What if anything can I do?

Answer 11688

• posted by: Matt on 2016-12-12
• score: 1

If you own part of the business, you own part of the business. You would have a vote in the decision to sell, and if there are net profits after the sale, you are owed your percentage of the profits.

It might not matter what the company made over the years though, if you didn’t have an agreement that gave you a salary or granted you distributions.

If he took distributions or dividends, you should have been given them as well, though. Does the papers that show the profit indicate how much he gave himself, and how he did? This might be something to talk to a lawyer about.

A few other things:

• In the notarized letter of your ownership, does it say if you have normal shares, or special shares with different rules than normal shares?
• In the notarized letter, are there any conditions that would have forced you to abandoned your ownership? As in, did the letter he sent you say that if you quit, you give up your share?
• Did you sign anything giving away your ownership percentage of the company?

These may affect what you could be owed. It’d be a good idea to have an interview conversation with a lawyer to see if they think it’s a good case to take on.

Answer 11693

• posted by: TimmyB on 2016-12-12
• score: 1

What sort of entity is the business operating as? For him to assign you equity it has to be at least a formal partnership if not a full LLC or Corporation. Those require documents to have been created that outline the way the organization should operate and establish your rights as a part owner. You should ask for the following:

1. Documents establishing the operating entity.
2. Financials for each year you held equity.

With those get an initial consult with a business lawyer that has a practice in small business or startup ventures.

Good luck!

Answer 12106

• posted by: Mowzer on 2017-02-14
• score: 1

This case is complex. You will need to hire a lawyer if you can’t agree amicably.

In my opinion, the letter represents your claim on 40% of the business. That means 40% of the net income since inception plus 40% of the net proceeds from the sale of the business.

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