How to find fair

[Jackson Long]

This is basically a rewording of another post I did.  The other one didn't get much traction and I would really like more input.  So I am writing it up a bit differently in hopes of making it more interesting.

My partner and I are buy-and-hold-brrrrrrrrr investors.  He writes checks and keeps his day job.  I work full-time to manage and build the business.  Neither of us had any experience when we started.  I now have a lot of experience- he still has none.  As such the relative value that I contribute to the business has grown substantially.  I would rather continue to work with him than move on- but I think a renegotiation is probably due.

With this sort of arrangement- what sort of split do you think is appropriate?

[Bill Gulley]

This issue is as old as the theory and history of partnerships.

You began as partners, then one feels that they are doing all the work and think they are entitled to more than what was agreed to. Actually, you should have thought about this when you agreed to be partners, now you want to "side step" your partner, 

Might remember, you wouldn't be in your position of success had it not been for your partner writing checks. So, what is that worth?  Didn't he make an investment in you? Now, it's time to pay, you agreed to bite it off, now you need to chew it.

You may think you have a lot of experience but I'd question that, because of your situation and looking at what you think are greener pastures. 

His "experience" is probably in having your back, funding his investment in the business and you. 

At one time you were madly in love, now you're looking at the blonde at the bar. 

So, what is fair? 

What is his risk exposure, he may not be risking everything to build a successful business but he has a liability side, probably the same as you. 

Your contribution is labor and management, that alone can't run a company, he's your goose laying the golden egg and you're shaving it up, molding it for a profit but now you don't want to feed the goose.

If you're working too much, hire help, build a company instead of a job. 

Not knowing what your deal was I can't say what is equitable, but you made the deal. Ask your partner how you and he can continue to build your company, if he's still interested and what he thinks his value is to the company. 

Instead of dumping him you might buy him out, the sooner you consider a buy out the better because if you are successful, it will only get more expensive later on. 

This is why I don't partner with just anyone off the street, and if I do partner, there are provisions made to avoid this issue up front because eventually partnerships get to this point.

Unless he agrees or you buy him out, you can't walk away with the company name, strategy and operation from another owner, if you just bail and go out doing the same thing, well, that's what starts law suits. You might have to kill the company, that means you start over in many respects, so is the greed worth it?

Last comment, partners should value their contributions in the beginning, most fail to, then each has an expectation to profit over time. It's also best to set a period to reevaluate a partnership with options agreed to before hand. A clean break is rare when partnerships dissolve, without clear expectations someone will always feel like they got the short end of the stick. :)