Business Purchase

Question: My partner and I started our business 31 years ago. We share ownership 50-50. He’d like to retire and wants me to buy him out. We don’t have a buy-sell agreement of any kind in place. How can we agree on price? And, if we can’t and he just quits working, would he be entitled to compensation?

You decided two years ago you wanted to acquire a competitor. You’ve spent months talking to a host of different companies and have finally found the perfect acquisition. You know it makes sense, you’ll be able to expand geographically and you’ll be able to add a couple of great products to your existing product line. You’ve heard people talk about due diligence before, but you’ve been in this industry long enough to “know” this is the right company for you.

Seller financing: Not only does seller financing help minimize the equity required, it provides ready and meaningful recourse in the event the seller breaches duties, obligation, representations or warranties. Try to get “right of offset.”

Assets, not stock: Buying stock is risky. A foolproof method for reducing risk is to buy only assets. Asset purchases also reduce taxes.

Why might a person want to own a business? Buy a business? Certainly, the reasons are unique to each person. Motives range from the material (i.e., money, possessions) to the spiritual; may originate from within (i.e., reside within oneself) or outside us (i.e., be socially or relationship-motivated); may be substantially selfish (i.e., greed, power) or altruistic; may be healthy and rational (i.e., strategic or self-actualizing*) or unhealthy and irrational (i.e., an inappropriate and unwise response to pressure, fear or deficiency).