Partnership Q&A: Time to get out . . . or get more $$?
By Nina Kaufman, Esq.Q.
I am a founding partner in a 15-year business. All 3 partners work in different capacities at our business. We have had financial struggles along the way. Recently, my 2 partners have infused capital to keep going; I didn’t have the money to make a contribution. We also have not received salaries for over 2 years, which has placed an enormous strain on my personal finances. We need to find an investor for the business to move forward. We already owe the IRS . . . and I don’t want to take on anymore financial responsibility and burden my family. We have no buy/sell agreement. I work the business day to day. I want to fill my obligations to them but I fear I could never pay them back equal. what do I do?
A.
You may want to speak to an attorney in your area who deals with small businesses to explore your options — especially as you have no buy-sell agreement. The approach you take will depend on whether you want to stay with the business or not. It will also color how you handle discussions with your business partners. Are you willing to sell your interest to them so that you can move on to (hopefully) more lucrative opportunities?
As another approach, would you all be willing to sell the company to a third-party buyer? Will you prefer to find an investor to keep the company going? If the latter, make sure you make a good business case for the investment, as angels will not want to pour money into a sinking ship. Inc.com has a directory of angel investors at http://www.inc.com/guides/start_biz/24011.html. Not sure how current it is and whether the angels’ criteria for investment will have changed in the current economic climate, but it is a place to start.
Want to learn more about Kaufman Business Law? This is the video to watch.
