Splitting With Partner

lowell5slide

Hey guys had a question Ive had partner for the past year About 6 months into the partnership "he" had a aquaintence put us in touch with a builder Well we got some of his houses were doing one subdivsion Well now were splitting up and he is saying that we take our contacts with us no problem with that I do pretty well but he is saying since his contact turned us on to the builder that he should keep any future houses or the work with this builder to himself I feel that we put this thing together I mean I did work while he met with subs and such I did all the paperwork for the jobs invoices and such Its probably about 10 to 15 house average about 7000 a piece ,profit about 1500 to 2 grand subbing out How should I feel about him thinkin he should have all of these houses for he future to himself really stumped on this never broke up a partnership any help appreciated

slickshift

Lawyer Up

"I can't afford it"-You can't afford not to
"But I want to keep this civil" -Exactly

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Originally Posted by ModernStyle I have never used this crap before and I pray to the paint gods that I never have to use it again, I would rather use Behr

Glasshousebltr

I say it's a free market, why can't ya both bid on the projects?

Bob

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lowell5slide

what am i going for with the lawyer excuse the ignorance lol

Mike Finley

What does your buy/sell agreement say?

joasis

Another story of a failed partnership. I agree with the above and here is a thought about the original contact. Did you actually meet the builder together, or did your ex-partner actually meet him and get the ball rolling? I would think the "friend" that put you in touch is the contact, and your ex-partner can keep him.

AtlanticWBConst

Some advise I got from a certified financial Planner who does a lot of advising for company owners, etc. :
Most people spend alot of time establishing the specifics on paper of their partnership and business.

But, very few layout the specifics on how to "take apart that business partnership" - if or when the business fails, or when the partners chose to go seperate ways.

His advise was to put just as much effort into ironing out those 'negative' details, as you would on the positive details of the partnership.

Just something to think about and learn from...

Sorry to hear about your predicament lowell5slide.
The only thing I can suggest is to find and hire someone like this Certified Financial Planner friend of mine. He handles ALOT of these type situations by coming in as a 'Mediator' and irons out the specifics (also legally) for both parties....

Hope you can settles this without too much ill will....

Good Luck

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Grumpy

Tell him he can keep the contract but that doesn't mean you will never work for the builder. His idea was to keep "contracts" not "customers". I ask you this, it may have been his contract but who has had the most face time with the builder and his people? If it was you, the builder will be more likley to want to continue working with you after this project.

I also ask you, who is keeping the company name and phone number? This person is more than likley to get the repeat business from past customers, regardless of whom (you or your partner) they contracted with. Assuming the business doesn't have any judgements or leans or sub standard work under it's belt, this is what I would be fighting for if I were in your position... not to mention established credit with suppliers and so many other benefits.

Please tell me you guys had a partnership agreement with formal exit strategy. It doesn't sound like you do.

Mike Finley

It sounds like you don't have a buy/sell agreement in place, so...

In most states if one partner wants out of the partnership that triggers an automatic dissolving of the partnership. That being the case there is only one course of action... you have to dissolve it. Without a buy/sell agreement in place it will come down to only two things 1) Together you decide upon how to divide the assets of the company. 2) If you can't reach a satisfying division of the assets it goes to court.

So obviously the best method is #1 and do everything you can to avoid #2. That being the case then it really all boils down to negotiations between you two. If you both want one of the assets which in this case is the ability for only one of you to approach and continue getting the work from this builder than one of you is going to have to give up something else to make it happen.

If your partner keeps insisting that the division is fair based upon making the division solely based on who made what contacts you will quickly reach an impasse and either have to give in or go to court.

It's going to be far better to look at the assets of the partnership like two business men would instead of what two freaken red necks would do which is what he is doing. The assets are the assets, how they came into the partnership is irrelevant, the partnership owns them now, so who brought what is not a factor, it is only a convenient way for your partner to get what he wants.

1) Explain to him that the assets are the assets, who brought what is not going to determine who gets what. The division will be based upon the value of the assets (in the case of the builder it would be future income)

2)Write down all the assets of the partnership and determine values

3) Divide them up so they are evenly split (assuming you are 50/50 partners)

It might end up that one person gets the builder and 2 other contacts and the other person gets 100 contacts.

If you can't come to a meeting of the minds so to speak it will end up in court as the only way to settle it.

PS - Don't ever get into another partnership. If you do don't ever get into a 50/50 partnership and make sure you have a signed buy/sell agreement from day one.

Good luck. This might make an ugly divorce look pretty before it is over if your partner insists on continuing to try to screw you in regard to using the "first contact" scenario which is ludicrous.

Grumpy

I misread, you said contact and I thought you said contract.

lowell5slide

Thanks guys For the most part he is a pretty reasonable guy I have a couple of commercial guys i broght in and im keeping them but they dont come in steady like I said the real thing to me is the future revenue that is pretty steady with a builder Man I hate this and by the way one of our goals next month was the buy out agreement so much for procrastinating I think im done with the partner thing llol