4 ms·

Thank you, the thing with scheduling payments over some sounds good to me, I'll try to propose it to Jim

adventured 7y ago
I don't know what kind of money you're thinking of (you mentioned a couple thousand dollars), if the sum is relatively small - eg $3,000 or less - I would not schedule payments over time. Try to get the partner to pay you out immediately and walk. If it's a larger sum, it might make sense to schedule it into payments (particularly if it means a consequentially larger payout). The ideal is to have no outstanding agreements whatsoever between you and Jim. Next week or next month when the app fails (or xyz happens), he might decide he doesn't think you're owed the rest of the payout because of said failure ('but the thing no longer exists, I am not paying for something that failed!'). It's a lot of bullshit for $3,000 in regards to a contract and payments over time. If he decides to stop paying for any reason, now you have to consider suing him, which is a lot to go through for $1,000 or $2,000 or whatever is remaining (more likely the balance is lost at that point). Right now Jim probably thinks there is serious value in the app. The odds are overwhelming that isn't true. While he believes that, your likelihood of getting paid are dramatically higher, so again go for the 100% immediate payout if you can.
- PopeDotNinja 7y ago
  For context, my payout was $200K USD. Small enough that the business could swallow the cost and pay out of savings and cash flow (50K upfront, and 150K deferred).
- mickeyM 7y ago
  Thank you, good point. I'll try to get as much upfront as possible
PopeDotNinja 7y ago
A couple tips: - After negotiating a ballpark sale price, I was advised to get an attorney, and that was excellent advice. The attorney cost 10K or 20K, and it was worth every penny. My partner trusted each other enough to share an attorney we had worked with previously. I trusted the attorney to work with both sides, even though the attorney was probably representing the business more than myself. - Any exit plan that involves deferred compensation should be crystal clear, and I encourage you to focus on discreet payments that do not require you audit the company's finances, as it's a lot easier for both sides if the only thing you have to do is cash a check (e.g. you receive a fixed payment of X regardless of how well the company does, and avoid things like you get X% of sales over a certain period) - just keep in mind that you and your partner will likely have wildly different ideas about the company valuation - one option you can consider is staying with the company and offering to buy out your partner. My partner was the one who originally wanted to exit, but she ended up buying me out, and it worked well for both of us! - be nice (or at least civil) throughout the process, as breaking up will be hard, and you need trust to be preserved to feel good that any deferred payments are likely to happen. Also, you might wanna work with each other again in the future. - don't negotiate an exit payment so high that the business might not be able to pay it
- mickeyM 7y ago
  Thanks! I don't have money now to afford a lawyer, and even if I did, it's possible that I'd pay more for a lawyer than potentially get in cash or equity Jim would never leave me the company and frankly, I have no interest to stay even without him

I don't know what kind of money you're thinking of (you mentioned a couple thousand dollars), if the sum is relatively small - eg $3,000 or less - I would not schedule payments over time. Try to get the partner to pay you out immediately and walk. If it's a larger sum, it might make sense to schedule it into payments (particularly if it means a consequentially larger payout). The ideal is to have no outstanding agreements whatsoever between you and Jim. Next week or next month when the app fails (or xyz happens), he might decide he doesn't think you're owed the rest of the payout because of said failure ('but the thing no longer exists, I am not paying for something that failed!'). It's a lot of bullshit for $3,000 in regards to a contract and payments over time. If he decides to stop paying for any reason, now you have to consider suing him, which is a lot to go through for $1,000 or $2,000 or whatever is remaining (more likely the balance is lost at that point). Right now Jim probably thinks there is serious value in the app. The odds are overwhelming that isn't true. While he believes that, your likelihood of getting paid are dramatically higher, so again go for the 100% immediate payout if you can.

PopeDotNinja 7y ago
For context, my payout was $200K USD. Small enough that the business could swallow the cost and pay out of savings and cash flow (50K upfront, and 150K deferred).
mickeyM 7y ago
Thank you, good point. I'll try to get as much upfront as possible

PopeDotNinja 7y ago

A couple tips: - After negotiating a ballpark sale price, I was advised to get an attorney, and that was excellent advice. The attorney cost 10K or 20K, and it was worth every penny. My partner trusted each other enough to share an attorney we had worked with previously. I trusted the attorney to work with both sides, even though the attorney was probably representing the business more than myself. - Any exit plan that involves deferred compensation should be crystal clear, and I encourage you to focus on discreet payments that do not require you audit the company's finances, as it's a lot easier for both sides if the only thing you have to do is cash a check (e.g. you receive a fixed payment of X regardless of how well the company does, and avoid things like you get X% of sales over a certain period) - just keep in mind that you and your partner will likely have wildly different ideas about the company valuation - one option you can consider is staying with the company and offering to buy out your partner. My partner was the one who originally wanted to exit, but she ended up buying me out, and it worked well for both of us! - be nice (or at least civil) throughout the process, as breaking up will be hard, and you need trust to be preserved to feel good that any deferred payments are likely to happen. Also, you might wanna work with each other again in the future. - don't negotiate an exit payment so high that the business might not be able to pay it

mickeyM 7y ago
Thanks! I don't have money now to afford a lawyer, and even if I did, it's possible that I'd pay more for a lawyer than potentially get in cash or equity Jim would never leave me the company and frankly, I have no interest to stay even without him