Buy-Sell Agreements: How to Get Rid of Your Partners
All business relationships end. A few when one of the parties is buried six feet under. Most end for other reasons: an owner’s divorce, bankruptcy, personality conflicts, etc. The list goes on. Yet one thing is clear: most Internet entrepreneurs have done absolutely nothing in advance to prepare for the inevitable.
One of the easiest preventative measures that e-commerce company owners can do is enter into a buy-sell agreement that provides for the buyout of other each other under certain conditions (like the ones listed above). Similar to a pre-nuptial agreement, a buy-sell agreement can be structured so that everyone wins in the future when the relationship terminates. There’s no better time to put such a contract in place than when all shareholders, members, partners, etc. are getting along instead of fighting. A mutual interest in protecting the company exists and no one is looking to punish another at that time.
Unfortunately, most online entrepreneurs wait until it is too late. Instead of resolving their differences and parting ways based upon specific terms in a buy-sell agreement, they try to figure out how to escape what is now a bad deal with maximum gain and sometimes with maximum pain inflicted on the other side.
If you own an e-commerce company with others, talk with them about having your Internet business lawyer draft a solid buy-sell agreement so that you can reduce the risk of destroying your business in the future.
Negotiate a Better Deal
If your economic circumstances have changed because of the recession, don’t breach your contracts (joint venture agreements, leases, car loans, mortgages, etc.). You can almost always negotiate a better deal with the other party instead.
Here’s why. Most people prefer something over nothing. If agreeing to better terms keeps you from walking away from a deal, realists will cut that deal if there’s not a better alternative.
Contrary to popular belief, price and terms can be renegotiated after a deal is signed. But you need some leverage to get what you want. The other side must believe that you’re willing to walk on the deal (or even go bankrupt) unless the terms of the deal are changed.
You can still create a win-win relationship with a new deal that reflects current reality in contrast with the way things were when the original deal was signed. If the other side doesn’t want to decrease price, for example, you can propose to extend the payment term (and pay additional interest over that term).
If you’re looking at having long-term ongoing relationships, don’t try to renegotiate a deal unless you’re truly in a bind. If you’re trying to pull a fast one now, the other party is unlikely to trust you in the future.
