The Situation: When a Partner Wants Out of the Business
Imagine how shocking it would be to have your business partner walk into your office one day, slam a legal document from his personal lawyer on your desk with the title “Partner Withdrawal Agreement,” and declare that he wants to be bought out in 30 days. This was the reality for one of our clients. After recovering from his initial shock, he called our team for help.
TobinLeff's Solution For Navigating the Buy-Out
Navigating this complex situation required immediate action and careful planning. We began by consulting with the client’s legal and financial advisors to work out the thorny issue of who could represent whom, as there were three parties involved: the two partners and the firm as ongoing concern. After ensuring the proper representation for all parties, we conducted a detailed review of the existing partnership agreement to assess the value of membership interests. We also factored in the potential risk of the departing partner taking business away, which could lower the firm’s overall value.
Our next step was to negotiate a counter-offer that would fairly address the departing partner’s financial demands while safeguarding the firm’s future. After extensive back-and-forth discussions with the departing partner and his advisors, we successfully secured an agreement that allowed the all parties to happily move forward.
Once the buyout details were finalized, we assisted in structuring an executive compensation package with equity incentives to attract and recruit a new, high-profile senior partner for the firm. This strategic hire was integral in helping the firm maintain its growth trajectory post-departure of the co-founder. Thanks to strategic consulting and careful negotiation, the firm successfully navigated the buyout and continued to thrive, despite the initial disruption.
Get in contact with the TobinLeff team today to learn how strategic consulting can set your business up for success.
