I Want To Sell, But My Co-Owner Doesn't - What Should We Do?

It’s a good time to sell a company. The M&A deal market remains strong and many profitable businesses are receiving lucrative offers from buyers. You’re ready to take advantage of the booming market, yet your company’s co-owner isn’t.

This scenario is challenging, but more common than you might think. Fortunately, there are ways to resolve disagreements between owners with different visions of their company’s future. But to prevent differing opinions from becoming hard feelings — and harming the company’s value — act immediately.

Behind Split Decisions

Owners may split on the decision to sell for many reasons. One owner may have bought in five years ago intending to sell when the company became profitable. The other owner might be the company’s founder with a more emotional stake in the business. The first is eager to take advantage of a strong M&A market; the second isn’t yet ready to pull up deep roots. Or, one owner may be under financial duress and need the cash from a sale. The other owner might object to selling now when the company is likely to be in a more competitive position in a few years.

Ideally, these kinds of differences are planned for well before selling is an option. When a new owner buys a stake in an already-established business, the purchase agreement should discuss how such ownership disputes will be resolved. For example, one owner may be obligated to buy out the other’s share at fair market value.

Few Options

If legal documents don’t help you navigate such dilemmas, you still have a few options. One is to enlist your potential buyer as an ally. Your buyer may be able to convince the reluctant owner about the benefits and financial rewards of a deal. But be careful: A coowner who is adamantly opposed to selling may resent outside intervention and dig his or her heels in even deeper.

For owners who don’t want to sell, the easiest solution is to buy their co-owner’s stake. If you lack the capital to do this, look for a new business partner. In fact, your company’s prospective buyer may be willing to acquire your co-owner’s share, enabling you to remain at the helm as co-owner.

Internal Opposition

Running — or selling — a business is hard enough without having to deal with a coowner who opposes critical decisions. Good communication is critical. So before you do anything else, sit down and talk with your co-owner about a compromise.


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Categories: Pre Sale

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