Buying my partner out of the business
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Buying my partner out of the business
My business partner is moving and wants to be bought out of the business. Currently it is a 50/50 partnership. The problem I am having with figuring out how much 50 of the business is worth is it is a cash business and we are currently doing it under the table No taxes being paid. We do not have any paperwork or documents that show our profits and how much the business has made since the end of February. I know my partners amount that he wants is going to be high but I do not want to pay too much for a company that doesn’t technically show profit.
Asked on September 18, 2017 under Business Law, Colorado
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
There are many different ways to value a business: based on assets; based on cash flow (different from profit); based on projected future earnings or profits; etc. An accountant or business consultant with experience in valuing businesses can apply the correct formula for the nature and age of your business.
If you and your partner cannot between yourselves work out a price you are both content with, hire an accountant or consultant with experience in valuing business--the two of you can agree on the person, so you both have buy-in--and go with the price he or she comes up with.
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