Business Partner Wants Out, Need Help!

[atxshannon]

Hello,

It's been less than a month since my partner and I filed our LLC paperwork in Texas and he's already wanting out. So far the only money put into the company has been around $1,500 each for paperwork filing and a failed attempt at getting a website built (different story). I'm honestly not very savvy when it comes to this, so forgive me if I sound like a dunce, but here were the two options he presented to me for how he wanted to leave:

Option 1 - I pay him $5,000 for his 50% of the company. This $5,000 represents the sum of his investment into the company (approx. $1,500) plus the additional, and while he claims "That may sound high at first, but if you think about the earning potential that this company possesses, due in part because of the foundation that I had a big hand in laying, than I think it's a steal."

...I honestly think it's a joke. When he left, we were nowhere near a point of knowing just how much our company could be worth. We didn't even have a first draft of a business plan completed.

Option 2 - "Another thing I'm open to is forgoing a buyout and staying on with our company as an owner, I would gladly sign a non-compete and a nondisclosure agreement, in exchange for a guaranteed seat on the board of directors if the company ever got to that stage."

...my concerns here is that for one thing i was an idiot not to get a non-compete signed. and he knows this, which is why he's trying to play that fact against me.

Anyways, what I'd like to do at this point is just dissolve our LLC and walk away, but without a non-compete in place there's nothing stopping him from turning around and taking my ideas to start his own business. Is there anything that I can do to protect myself? I offered originally to buy out his stake in the company at exactly what he had put in, which he countered with the $5,000.

To me it seems obvious that this person is putting the screws to me, but what can I do that will 1) protect my ideas and 2) get this dude away from my company right away?

I'm in no way capable of paying for legal advice at this time, but a friendly suggestion or two would really be appreciated.

[radiogirl]

Much as you may hate to hear it, you need to get advice from a certified lawyer that you can trust. When you consider what the implications may be if your business takes off - if your business gets to the board phase and he gets a directorship...what else is he expecting along with it? and for what?

Was he truly instrumental is getting the foundation laid, as he states- or is he just trying to bully you into giving him more than he is due?

Is there anything stopping you from walking away from the partnership yourself and starting up your own company...or are you too far in with the existing one?

[Tom Young]

Originally Posted by radiogirl

Is there anything stopping you from walking away from the partnership yourself and starting up your own company...or are you too far in with the existing one?

Too bad that you did not have a chance to read this post - http://www.smallbusinessbrief.com/fo...ad.php?t=20500 - before getting caught in this dilemma.

Walk away before you lose your pants while you still have your sanity!

Tom

[DeenaEsq]

ATXShannon,

Although I'd really need to see your formation documents to see how things would shake out, here's my $.02.

If your business (and the intellectal property that it holds) is truly that original and that valuable, you may want to pay him off, $1,500 now and a % of profits over time up to $5,000 (or any lower amount you might be able to negotiate), but for goodness sake, please get a non-compete before you settle and make the settlement in writing conditioned on his signing all the papers to remove him from the LLC and renouncing his claim to any rights or future profits of the business.

Although I don't know what your business is, you can certainly cut your losses and dissolve the company and walk away from this guy. Even a noncompete isn't going to protect you forever (they require a reasonable, limited time span (usually 2 years or less) and geographic location to be considered valid). I'm guessing that he's just trying to wring some $$ out of you and won't actually compete. And what will happen if he does? You'll be there first and you'll do it better....

Of course, your other option and my personal preference, since your friend is the one who wants out is to dictate the terms of his withdrawal. You're in the "position of power". Call his bluff. Tell him if he wants out, he's welcome to go. You'll give him his $1,500 and not a penny more (and I wouldn't even give him that) in exchange for the non-compete of your choice. Otherwise, he can sit in the company and be miserable.... Or you'll dissolve the company and his $1,500 can go down the toilet with yours.... It's still cheaper than the $5,000...

As an aside, if you have any intellectual property that hasn't been registered, make sure you do so as soon as you dissolve so that he has no rights to it. In fact, if it's your intellectual property, you may want to register it to yourself personally and make a contract with your LLC to license it to the LLC.

I hope that helps. If you've got any more questions, let me know.

Deena

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Any opinions are offered without knowledge of the specific law of your jurisdiction and with only the limited information provided in your post. No advice given here should be reasonably relied upon by you or any third party without consulting an attorney who is aware of all of the facts and law surrounding your situation. Any advice given here is not intended to creat an attorney-client relationship in any way.
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[lovetiffany]

I think you can write this text in an lawer website, there may be have someone help you free,
You must resolve this by law. In no case he can get opition 1 and option 2.