3 ms·

Sounds more like you had an oral contract and didn't live up to it, frankly.

• sejje 13y ago
  Since I'm already downvoted, let me clarify: Ownership is ownership. Maybe there's inherent responsibility, but you can't take away ownership. If your friend was required to work to achieve his shares, it should have been set up as vestment. Giving ownership may have been a mistake on your part, but once you gave it, it's my personal belief that you should keep true to your word.
  • nobodysfool 13y ago
    I don't know but I believe that if he was getting paid more than his work was worth, then his distributions (aka paychecks) could be considered distributions of owner's equity, hence he was being bought out a little bit at a time.
    • grey-area 13y ago
      If that wasn't explicitly stated, why would his friend believe that to be the case, since he already owned 1/3 and was also doing work for that salary? Normally ownership does not change without dilution, it has nothing to do with ongoing work. This kind of thing has to be spelled out in contracts - they should have set up a company and issued stock at the start, in most countries that is fairly straightforward, and it makes the legal position crystal clear.
  • rahimnathwani 13y ago
    Yes, everyone's shares should be subject to a vesting schedule, including the founders': http://www.entrepreneur.com/article/231044 http://www.entrepreneur.com/article/231044
• kelnos 13y ago
  How is that at all the case? The oral contract seemed to be simply, "I own 2/3 of the company, and you own 1/3". There was nothing about forcing the other party to buy out their portion. There was nothing about any kind of valuation. I'm not sure why he didn't simply say, "sorry, I don't have the means or desire to buy out your portion". When you own a part of a private company, you don't have any liquidity until you have a buyer. You can't force the existence of a buyer. In the absence of a contract stating otherwise, the majority owner is under zero obligation to be that buyer. In the end, he got the other guy to agree to take a certain amount of money and go away. That may not be what the other guy expected when he thought he owned 1/3 of the company, but I personally don't believe he had any right to expect anything without further terms laid out in writing. I'm just glad that it seems like the majority owner managed to get out of the situation without having to destroy the business.
  • busterarm 13y ago
    Agreed. If buying out a partner destroys the business, the value of the business is a lot less. For everyone siding with the friend, how fair is it that someone skims 30% off the top and the majority owner gets to liquidate and/or nothing? That's having a senior lender, not a business partner.