I own 49% of a business and I want out. What options do I have?
My business partner and I own a restaurant in a small town that brings in about 1.2 million per year and approximately 200K in profit. I own 49% of the business.
I came into this business 6 years ago and built it up with loans. Now, I want out. My business partner proposed buying out my portion for 20K. However, we don’t have a buyout agreement. Do you think I should just accept her offer or should I be getting more? Do I have better options to sell my shares? How does a company get its value? Given the fact that I own 49% of the company, what options do I have?
There is still quite a bit of debt associated with the company. How will that factor into the options I have? I also have some concerns with my business partner’s father being our accountant. I’m never able to see the books or anything.
I'm open to any suggestions.
As an owner, you have full right to the disclosure of the financials of the company.
You should be getting more than $20k if the profit is $200k per year.
Can I ask why you want out?
A company gets its value from EBITDA and a factor or multiple of that.
Do your bylaws have anything that discusses buyouts?
This is a hard question to answer without knowing how much debt the company is in and how much time is needed to pay off this debt, there are so many factors are taken when figuring out how much a business is worth, including whether or not you were getting paid a salary... your partner can't buy you out for 20K just like that, she needs to explain when did she get the 20K from if the business is making $200K profit a year, how many year have this business been profiting at the $200k, if only this last year and you were not profiting before then that is a different case, but let's say this 6 years old business, you've been profiting at $200K for 2 years, you have $40,000 in debt then you guys need to pay off the debt first to figure out how much this business is worth if you both going to sell it now then you can determine the value of your share. I would diffidently talk to a consultant (not a lawyer) that have an experience in this field.