Business partners want to buy me out, advice? Tips? Involves a patent?

Question

I am the president and own 65% of the business currently. The business involves a patent. My partners are asking for a buy out, which I am interested. But, part of the agreement they drafted includes the fact that they will receive their initial investment in return upon licensing agreements/the sale of the patent. I need some guidance on something like this. I would like to counter offer leaving the reimbursement of the initial investment out, after all their $45k investment has a potential return of multi-millions.

Answer 1

Why don't you get an independent valuation of the business and the patent, and see how the numbers work out?  maybe you can show that the potential returns have a much higher net present value than teh $45 K they want today, even after accounting for the opportunity cost associated w/having to wait to get the $45K back.

You have every right to submit your own Purchase Agreement.  I mean, the way I see it (w/out knowing much specific at all!) , you've got sellers under duress..they clearly need liquidity.  PLUS you're the controlling shareholder.  You can hypotethetically never pay them dividends, and never buy their interest back, rendering their holding useless.  there are ways to account for this in valuing the company as well).  but i would think that you are the one coming to the negotiating table w/an advantage.

why don't you contact me to discuss?  this is my area of expertise, and I would be happy to help draw up a Purchase Agreement along w/underlying valuations and/or projections.  I'm on medical leave now, but have over ten years experience...i can send you my resume.  

i'm not even trying to spam, but this is a situation where both sides need this type of consulting.  trust me, i do plenty of litigation support too for cases like this where you've got unhappy sellers or buyers 3 years later suing claiming fraudulent conveyence or other things.  

Answer 2

Ask them for 3 times the silly amount that they offered you. Why? Because they are ripping you off bigtime.

Answer 3

This is a complicated issue and you haven't given nearly enough information here (nor should you). Talk this over with a lawyer who specializes in small business M&A. Or as a first step if you just want some thoughts, see if there is a SCORE chapter in your area. They have volunteers who might have gone through exactly what you're contemplating.