llc, exit, buy-out, new-yorkI am currently in business (2 companies), in NY with an individual whom I once had an amazing business relationship with. Unfortunately, like many others we do not have any signed agreements (I know it was a red flag when he refused to sign one from the start, but you think the people you care about will not hurt you.) So, please do not make comments about not having an agreement, I get it but, that is irrelevant to helping my current situation.
One company is a 50/50 LLC. (Landscaping) We have tried to pay everything 50/50 in the past but, things here and there were paid separate. Main insurance and bills however, were always split 50/50. There are about 45 clients at this time. And we were working it that the jobs each of us worked were what we were paid on, not automatic 50/50 splits on profits Him and I do not see eye to eye on a lot of things and it has just become unhealthy, and he now refuses to cooperate on anything except his terms. I want to get out but, he refuses to buy me out stating he doesn’t need to because he has a set-up that works for him. There is equipment for example one large item in my name and I have the title but, we have both been paying 50/50 for every month that is on the table. (I do not have the capacity to pull such item so unless I rely on him I make no profit off of it) I believe legally that item is still mine if I wanted to up and sell it correct? (Of course I would do the correct thing and pay him half the profit it sold for) What if I just stop paying my 50% of the bills. Also being 50% partner am I automatically entitled to 50% of the profits even if I don’t work. That is not my intent I am not a freeloader but, my back is against the wall.
And anything I do with this company will automatically negativly affect me with the other company because he is 51% (I KNOW, I SHOULD HAVE NEVER TRUSTED. BUT, HE WOULDN’T HAVE SIGNED AN AGREEMENT ANYWAY, AND I DID NOT HAVE ANY MONEY FOR A LAWYER).
How does partner A get out if partner B is unwilling to buy out A and unwilling to sell the company? I guess is also a factor in this.
It’s a complex and very individualized situation. But one thing I can tell you for certain is that if he won’t compromise on anything then you need to shift away from your nature of doing everything in a fair and balanced way, and shift into a mode of taking stock of any leverage you have, and using it politely but firmly to your own advantage.
Don’t sign anything that does not resolve ALL of your issues and allow you to make a clean break at once. Don’t fix any of his problems based on a promise that your problems will be fixed soon in the future. The lack of written agreements between you puts a cloud over his ability to negotiate some business transactions such as obtaining loans, credit, equipment leases, entering contracts, etc.. Including taking on other partners. He may not be thinking about those things now, but his attitude will change if some business dealing requires the signatures of ‘all owners’. Banks, investors, and prospective new business partners won’t invest a single penny in a company with murky ownership documents, lawsuits, or infighting among the owners. If he wants to continue running the company then these considerations provide you with leverage.
If you suspect that he is working to establish a new business relationship with a vendor, creditor, bank, or investor make sure to show up at the right time and politely introduce yourself as a co-owner or partner.
Since there’s no vesting agreement you can easily resign and still have full 50% because equity is something you negotiate at the beginning and not something that is dependent on how significant you actually become.
That aside, the concept of paying companies bill out of your own pocket is kinda weird so I dont really understand what you are trying to say.
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