My Partner Is Trying To Scam Me Out of Our Business

In today's digital world, you need ID theft protection that actually works. Protect yourself at Xander.com. So a few years ago, a friend of mine came to me and asked to start a business. It's a landscape service, you know, project based business and, um, things have been going well, you know, we've been growing, making money. And then out of the blue said that, you know, he can't do, he doesn't want to continue the partnership anymore and we have an operating agreement. So I said, okay, well, we'll go about it. The way that the agreement says get evaluation done. And I kind of did that. Whereas he is saying, no, the business isn't worth anything. It's only worth what we own. And I believe that's different based on, you know, the goodwill and the cashflow and, and, and the profit that we've made and we've kind of reached a stalemate at this point. And I don't really know where to go from here as far as, um, how to kind of the situation to kind of get this clean and over with, you know, I got to say, does he not want to pay to get evaluation? Cause he thinks it's worth nothing. Is that the deal? No, he doesn't want to pay for the company. He kind of just wants to dissolve it and then start the exact same thing on his own. Uh, you know, the second that that's done, what does the valuation cost? Listen, identity theft doesn't happen because you're careless. It's part of the modern world. Even when you do everything right, criminals can steal your information and turn your life upside down. That's why I've told people for years to have identity theft protection. And the only one I've ever recommended is from Zander insurance. They monitor for fraud. And if something happens, they do the hard work to restore your identity. Go to zander.com and protect yourself today. What does the valuation cost? Uh, I mean, 1500 to 2,500, depending on, uh, have you done that already? Have you gotten an evaluation? I've, I've got an informal one. And then I spoke with an SBA lender. Um, that's a friend of mine and gave him our tax returns and said, Hey, say I was trying to buy out my business partner. What would you guys approve? You know, on a loan, because obviously they're, they're not in the business of making bad deals. And, uh, they said a valuation of around 775, you know, so making my 50% shares anywhere from like 350 to 360 range. That's a big gap from it's worth nothing to it's worth three quarters of a million dollars. Now I would not go into debt to buy him out. If you wanted to continue this, you could do some sort of like profit sharing agreement. Yeah. Sorry. I'm a little confused. Is he just wanting to leave? He wants out and wants to start his own. He wants me out. Oh, he wants you out. Oh, I'm sorry. He basically wants to run a solo business. Leave. And I was like, well, just let him leave and you keep the whole business. Yeah. What does the operating agreement say if the business, one of the partners want to get out? It says obviously get evaluation done. Um, you know, then multiply that by your shares or 50, 50 owners. And then you can either do it through an SBA or the operating agreement says a 20% down and then four quarterly installments for 60, you know, 60 quarters. So basically 15 years, which is kind of egregious, I think. And that puts me at risk in case, you know, he defaults. Um, and I would, you know, that whoever's on the other end of that, uh, I wouldn't imagine that that's, uh, do you guys have any debt in the business currently? Yeah. Uh, like equipment and machine loans, probably a little over a hundred thousand, I think 120,000. Hmm. Well, I mean, if the agreement says you get a valuation, then I don't see how it's illegal for you to take that out of the business checking account and go get a valuation. What's stopping you from doing that? I don't, that's not the, that's not the issue. It's that whatever that valuation comes back as he's going to say, no, it's not worth that. I'm not paying that. Um, why don't you just buy me out? And then I'll, there's a two year non-compete attached to our operating agreement, but. Well, if it's worth nothing, then you don't have to buy him out. Isn't that what he's saying? That's what I'm thinking. I don't understand. Let him, let it be worth nothing. And all right, there's nothing to give you. And then he can leave and start his own thing, right? Yes. Now the other part of that comes into it is I picked up my, essentially my life and moved out of Nashville down to, you know, we're kind of in his home turf where he grew up. I'm from Ohio. Um, football brought me down here. And so I'm in an area that really the only reason I moved down here was because we were running a business that was, that was doing well. And, um, so are you capable of running the business on your own or hiring someone to help? Sure. Yeah, no doubt. I'm definitely capable, but if he's going to turn around and start another, well, where do you want to live? Uh, about, you know, in the Nashville area, we're about an hour and some, you know, an hour and change. So you would rather live somewhere else. So then why don't you go get new clients elsewhere? I can do that. Um, obviously, you know, selling the house that I live in now, I got my first child due in a month, not even a month, less than a month. Um, my wife's, you know, we do a health insurance through her job here. Uh, the logistics of it all are just not great to leave with no form of compensation or buyout. And in that case, um, I'm guessing nobody would actually buy your business. I mean, no, probably not on a very desirable location. And that's his argument is that it's not worth. Yeah, he says it's not worth, obviously, if we sold it to an outside buyer, it would be tough for them to do that. Now, all the contacts that we've built in the last three years, if he is still going to continue, is he going to poach all their current clients? He, I mean, yeah, essentially. Yes. If we were to divide ourselves right now and I start my own company and you start your own company, we're going to be competing, you know, for the same clients. He's going to be like, Hey, I started my own thing. Come, come over here. Sure. Yeah. You, you guys need to come to a consensus on what these next steps are. Otherwise this is going to be a bloodbath. Exactly. And there's debt time to worry. Now the debt part, whose name is the debtor? Yeah. Uh, it's an LLC, you know, so we're, we each have 50% of it. Okay. So if he leaves the business, he's still liable for the debt. Yes. And as he thought through that, unless I were to say, unless I were to, well, no, he doesn't want to leave the business. He's not going to leave the business. He wants to get me out of it. I thought he wants to start his own. Yeah. And you don't want to do this. You don't want to do this anymore. Right. I do, but I'm not, I don't want to, I'm not going to do it by myself down here where I'm and he can't afford to buy you out to do this solo. I mean, he could, he's saying that he, yeah, that's what I'm so confused about. Well, he wants to do a solo. He can't afford a couple of options. Either you guys just dissolve the business. You start your own thing. He starts his, uh, you sell the assets, pay off the debt and just say what a bad deal that was. You go your way, I go mine. And you got to outperform him and your new and your new gig. You know what I mean? To, to get it competition wise, because you're not willing to move. I just asked you in the middle of the call and you're like, well, I got a baby on the way, a house, my wife. So you're not moving. You're stuck regardless of the business. So we're, so you either are going to do this business or do a business like this, or you've got to go find a different job or you go move and do this business if you feel like the competition is too much. You know, I would move if, you know, we each took six figure salaries last year and essentially nothing's going to change for, you know, for my partner. It, whether we dissolve or he buys me out, like he's still going to continue like, like business as usual. And so without me in the picture, there goes a six figure rate. So I'm figuring if I could be compensated somehow for, you know, giving you your company back. Yes. But Steven, but that makes it doesn't make sense. If he wants out, if he wants, if he wants the business by himself, then yes, then he needs to write you a check. I a hundred percent agree. And if he's not willing to write you a check, then you can say, I'm not leaving the business. Then he has to decide he's out and he may go start his own thing. And then, yeah, you got competition in the area, but it is what it is. So, yeah, but I still have the infrastructure and everything of our business, correct? Yeah. So you gotta, you gotta say good luck, bud. Game on. Yeah. And then you can. That's kind of what I was thinking that it was going to end on is, well, if you're not going to buy me out, then we're going to continue to be partners. A hundred percent. This is a classic. We can do this the hard way or the easy way. But yeah, the debt tied to it's a whole nother thing. You guys got to figure out, maybe you guys form a new agreement saying, hey, we're staying in this thing until the debts are paid. And then here's how it's going to get divvied up. And I think maybe you rip up the current one and draw a new one up. That makes sense for both of you. Because the current one is not not really working. A ship that does not sail, partnership. Nailed it. That's a hard thing to do. And it ruins the friendship. It does. On top of it all. The best ID theft protection comes from Zander. Real monitoring, full restoration, no fluff. Learn more at zander.com.