Unfortunately, unless there is provision in a partnership or shareholders agreement for the exit of a shareholder or partner from the business, there is no simple formula or solution, and no right or wrong answer to valuing a business for this purpose. A business broker's approach may make sense from an accounting point of view or in valuing it on a market basis, but a business is usually worth more to an owner who is familiar with its operations than to a marketplace purchaser who will have to learn the ins and outs.
One fair approach which can be used if the parties are willing, is for you to stipulate a price per 1% interest and then let your partner buy it from you at that price (times your percentage) or sell their share to you at that percentage rate.
This approach is fair for you because you won't pay more for the business than you are prepared to, (and if you are being fair about your offer, you should also be happy to accept the same price for your share).
On the other hand, it fair for your partner because if the judge the price too low, they get to buy you out at that price (which should make them happy) and if they judge it high, they get to sell at that price) which should make them happy.
If you cannot reach an agreement as to how to resolve the matter, your options will be to force a sale or continue with a likely dysfunctional business, neither of which is advantageous to either of you. The process or the possibility of forcing a sale are quite different depending on the nature of your business - partnership, company, etc.
I trust the above assists.
Good luck and please click the accept button.
Distributing the assets of an unincorporated partnership is subject to:
and there is no set procedure for engaging a receiver, though this would appear a reasonable approach. The receiver can then arrange for the sale of the partnership assets individually or as a job lot, and there is nothing to stop you bidding on any proposed sale.
Indeed, the involvement of a receiver may be just what is required to get you and your partner to be realistic in your negotiations. The costs of a receiver will have to be born by the partnership and can vary depending on who is appointed, and the complexity of the liquidation.
The only problem with this approach is that business may not be sold as a whole but rather the component assets may be sold separately if they are likely to bring a greater price if sold this way.
Good luck and I trust this assists.
Please click the accept button.
In what way does she say you would be breaching the Partnership Act by doing what you propose?
The act doesn't specify that the appointment of a receiver is necessary, it just says that on dissolution of the partnership, the assets are applied to cover debts and then apportioned in accordance with the partners interest (i.e. 60/40).
You are partners and you need to work out how to proceed together, otherwise you will likely just end up in court.
The lease is presumably in the business owner's name.
Only if you were operating your business under a company would you have the lease in the company name.
It follows that you and your partner will have to negotiate the end of the lease or otherwise agree for one of you to take the lease over.
The receiver will likely require up front payment or at any rate will be able to claim against the partners for payment after the assets of the partnership are dissolved and distributed.
No doubt you should stay in touch with the receiver throughout and make it clear you are interested in bidding on any property which is being disposed of. The receiver's objective must be to maximise the return on any liquidation and so if you are prepared to pay a higher price than anyone else then you will be able to purchase the assets. Indeed, it may well be that the whole exercise becomes one of you, your partner and the receiver sitting down and negotiating the prices for all assets.
There are no rules that restrict what a receiver can do in this situation, since the receiver is simply an appointee of the partners.
You can object to any particular course as a minority partner, however, if either you or the other partner want the partnership to end, then you either have to reach agreement or liquidate the assets. As I've said though, if you can persuade the receiver that selling to you at any particular price will maximise the return then your partner will have legal issues if she doesn't sell on those terms.
I expect the lessor would probably agree to you taking over the lease, but would have to pay out her share of any bond or bank guarantee.
Also, I suggest you ask her what the difference is between having the property valued by a valuer (or three valuers) and her selling at that price and her having a court appointed receiver who will simply value the business and then you will likely buy it off him at a value the valuer thinks is appropriate.
Not sure it should make much difference to you.
I think you should invite her to appoint a receiver on condition that the receiver advise you what he thinks can be raised and then agree to exceed that offer.
From the way you have described the business and its profits it seems likely that it won't be salable as a going concern so absent an offer from you, the business assets will simply be sold up in bits and pieces. In which case you should be able to snap up either all the business equipment, or the business as a whole for a bargain.
The lease will be in you and your partners names and must be honoured. That means that if you want to quit the lease you will have to abide by the lease terms for termination and may be liable for rent until such time as a new tenant can be found.
There is no formal receivership process for partnerships in the way that there is prescribed process for corporations (which is set out in the Corporations Act). Presumably, when you appoint the receiver you and/or your partner will be giving the receiver instructions to realise the maximum value from the business and/or its assets.
You should keep working in the business until such time as you and your partner decide not to sell it as a going concern, otherwise it will lose value as a going concern.
The removal of the Air Conditioner should eliminate the need to apply for a DA, however if you are going to keep it then yes these costs are partnership costs. How this affects your sale price is anyone's guess and is not a legal issue.
Leave issues as to what prospective buyers are told to the receiver. You can get in significant trouble if you are seen to be trying to reduce the interest of prospective buyers in order to secure the property for yourself at a bargain price. Your partner would then be in a position to sue you for damages.
Good luck and please click accept.
The receiver's first task will be to form a view as to the value of the business as either a going concern or alternately its recoverable value if its underlying assets are sold. If you make it clear you are prepared to pay the higher of those amounts plus $X then his recommendation ought to be that it be sold to you for that price.
You simply have to make sure you stay abreast of what is happening and how he is proposing to liquidate the assets. If instead of trying to maximise the assets the liquidator is being instructed by your partner to simply sell off the components without regard to maximising the money raised, so as to thwart your efforts to buy the business, you should see a lawyer and takes steps to stop the receiver from doing so.
Yes, the receiver is paid out of the proceeds.
If you make it clear at the outset that you will pay $X more for the business than what the receiver believes he can recover any other way, the receiver should rec
DISCLAIMER: Answers from Experts on JustAnswer are not substitutes for the advice of an attorney. JustAnswer is a public forum and questions and responses are not private or confidential or protected by the attorney-client privilege. The Expert above is not your attorney, and the response above is not legal advice. You should not read this response to propose specific action or address specific circumstances, but only to give you a sense of general principles of law that might affect the situation you describe. Application of these general principles to particular circumstances must be done by a lawyer who has spoken with you in confidence, learned all relevant information, and explored various options. Before acting on these general principles, you should hire a lawyer licensed to practice law in the jurisdiction to which your question pertains.
The responses above are from individual Experts, not JustAnswer. The site and services are provided “as is”. To view the verified credential of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service (last updated February 8, 2012).