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Leaving a partnership to sail the Mediterranean
Nina Kaufman
in Exit Strategies, Global Perspective, Philosophy
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2 Comments
When I first heard David Greer's story, I started to salivate. Not at the acrimony that created the situation, but at the end result: a two-year Mediteranean cruise with his family!
But it could not have happened had David not been willing to follow the advice of his attorney and sign a shareholders' agreement for his company.
Here's how Dave tells it:
Around 1985 I signed my first shareholder’s agreement. It contained a Shotgun Clause. I remember arguing with my lawyer at the time that “we don’t need this – my partner and I get along fantastically.” My lawyer said, “you get along now, but that might not always be the case ...”.
Roll the clock forward to 2000. We had gone through a few different corporate structures by then, but the original shotgun clause was in place. Good thing, as for the first time in our relationship we came to diametrically opposite views for the future of the company. Without the shotgun clause, I would have had no way out. Thankfully, I made a good offer and as it happens, I got bought out.
At the time, everyone was shocked that I was out of the company, but it let me do something completely different – sail for two years in the Mediterranean while my wife and I home schooled our three children! (Visit www.davidgreer.ca/cruise).
I’ve always been very thankful to my original lawyer that made sure the clause was in place from the very beginning.
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Reader Comments (2)
Hi, I have a similar situation. I am a founding partner in a 20year business. We all(3) work in different capacities at our business. We have had financial struggles along the way. Through the more recent years My 2 partners have infused capital to keep going, my husband and I are from more meager means and did not. We also have not received salaries for over 2 years, due to this we have started foreclosure on our house after exhausting savings. We need to find an investor for the business to move forward. We already owe the IRS, I don't want to take on anymore financial responsibility and burden my family. We have no buy/sell yet. never did. 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?
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 the way you handle discussions with your business partners. 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.