Partnership Buy-out

Written by Patricia Skinner
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Facing A Partnership Buy-Out?

Sometimes the time comes when one or more of the partners in a business needs to move on. This leaves the question: What should happen to his or her share? Often, provision will have been made in the original partnership contract for such eventualities, for a partnership buy-out is not an unusual event at all.

As with all things in life, the first thing the partners should do is to define exactly where everyone stands. The first step is to have the business valued. Even if a previous value has already been done, you need to do a new one at the point of buy-out. This is to make sure that everyone gets what's due to them.

Base Your Partnership Buy-Out On An Accurate Business Valuation

There are many reasons for a partnership buy-out. Maybe the business has really gained in value, and one partner is hoping to be able to set up a new venture from the proceeds. Maybe one of the partners has decided that his career needs to take a different turn or to retire. Whatever the reason, it is entirely possible to handle a partnership buy-out so that all partners are satisfied with the outcome, and you can all stay friends!

Sometimes a partnership buy-out will come about because one of the partners in a venture will become seriously ill or die. In this case the other partners, or the relatives of the deceased, may prefer that the partnership is altered. Again, there should have been some kind of provision in the original partnership contract, but still it is important to seek legal advice under such conditions. Once more, the starting point for such a procedure is an up-to-date business valuation.

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