How do i exit a business partnership Thanks
Discussion
Hi
Thankyou for looking, need some help.
How to package up a exit strategy to leave a business.you
-My grandparents own a blueberry farm, 50/50 split with a partner, land was bought together years back.
-They don't get involved in the running, as they live in another state.
-They want to take there money out. They have been getting a very,very,very low return on the investment for years.
I suspect the business partner will start to make my life very difficult. and drag out any exit for years. In order to buy the share/land under market value.
2 farms, I estimate values as following
one = 1m
two - 500k
Option 1
-we value both farms via a agent, they pay close to market rate to buy out my grandparents.
- I suspect they will argue that the vaulation is inflated.
Option 2
we offer them one orchard, leaving the other for my grandparents to sell/lease as they wish. one person will be left with a bill due to pay the price difference.
My worry, there will be a transfer of ownership twice .1- when we remove the business partner from the farm. 2-when my grandparents sell in the outside market buyer. hence invoking capital gains twice.
option 3
Both for sale.
I suspect prospective buyers, will be put off or even refused access for any viewings. I can see this dragging out for years to come.
Option 4
To ensure a good return.
The partner pay's a full lease fee at market value until matter is closed.
what are my options, how would you try and package a exit deal. How are these things usually handled.
Thankyou so much for any help
Thankyou for looking, need some help.
How to package up a exit strategy to leave a business.you
-My grandparents own a blueberry farm, 50/50 split with a partner, land was bought together years back.
-They don't get involved in the running, as they live in another state.
-They want to take there money out. They have been getting a very,very,very low return on the investment for years.
I suspect the business partner will start to make my life very difficult. and drag out any exit for years. In order to buy the share/land under market value.
2 farms, I estimate values as following
one = 1m
two - 500k
Option 1
-we value both farms via a agent, they pay close to market rate to buy out my grandparents.
- I suspect they will argue that the vaulation is inflated.
Option 2
we offer them one orchard, leaving the other for my grandparents to sell/lease as they wish. one person will be left with a bill due to pay the price difference.
My worry, there will be a transfer of ownership twice .1- when we remove the business partner from the farm. 2-when my grandparents sell in the outside market buyer. hence invoking capital gains twice.
option 3
Both for sale.
I suspect prospective buyers, will be put off or even refused access for any viewings. I can see this dragging out for years to come.
Option 4
To ensure a good return.
The partner pay's a full lease fee at market value until matter is closed.
what are my options, how would you try and package a exit deal. How are these things usually handled.
Thankyou so much for any help
The use of the word 'State' suggests this not to be a UK based business. I'm not certain we grow blueberries in the UK. Either way, there may exist conditions that relate to the arrangements there that don't apply here. But....
The conditions for the exit of any partner should be clearly set out in the shareholder's agreement. As you're asking though, it's unlikely one exists.
That being the case, the options for your grandparents are likely to be limited because everything will be dependant upon the other partner and efforts should be made to engage in discussion with them first. Exit by mutual consent will be better for all. If they are amenable, it then just comes down to having the business properly valued and all parties agreeing a price.
Your grandparents could find someone to buy their share but this would need to be agreed with the other partner.
So the best advice is for them to speak to the other partner and decide on the best course of action from there.
The conditions for the exit of any partner should be clearly set out in the shareholder's agreement. As you're asking though, it's unlikely one exists.
That being the case, the options for your grandparents are likely to be limited because everything will be dependant upon the other partner and efforts should be made to engage in discussion with them first. Exit by mutual consent will be better for all. If they are amenable, it then just comes down to having the business properly valued and all parties agreeing a price.
Your grandparents could find someone to buy their share but this would need to be agreed with the other partner.
So the best advice is for them to speak to the other partner and decide on the best course of action from there.
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