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How to buy out a business partner

Updated April 17, 2017

Buying out a partner can happen for many reasons, but the situation does not have to end badly. The best way to keep things positive when buying out a portion of the business is to make sure everyone is being treated fairly and is getting a good deal. Learn how to buy out a business partner without worries of it ending badly.

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  1. Before sitting down with your partner to discuss the buy-out, hire an independent firm to preform an audit to determine the worth of the business. It might cost an individual to leave a business if loans are more than the worth of the business.

  2. Each side in the separation should seek legal advice from different sources. Discuss your rights and obligations as a partner. The lawyers will help negotiate what is fair according to the law and any previous contracts between the partnership.

  3. Follow up with your side of the contract. After the buy-out has been determined, a release of company liabilities contract will probably be signed to release the previous partner from loans of the business. Most contracts will require remaining partners to be responsible to renew the loans to remove the previous partner from obligations of the loan.

  4. Make sure the business buy-out is legal and documented correctly. Paperwork for each form of business is different in each situation, so it may be in everyone's best interest to have a company lawyer look over this step carefully. Small businesses may also find help through the Small Business Administration at sba.gov.

  5. Tip

    Bringing in a third party to negotiate the buy-out will keep the business deal fair and will ensure each partner they are getting a good deal.

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About the Author

Based in mid-Missouri, Elaine Stephens has been a grant writer since 1999 and a small business owner since 2006. Stephens has been writing business-related articles for over five years and has been published in magazines such as "Solar Today," "Entrepreneur" and "Women in Business." She holds a Bachelor of Arts degree in Marketing and Non Profit Business.

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