3 steps to take if you want to buy out your business partner

Business partnerships, much like marriages, often evolve over time. Your goals may no longer align, or your personalities could now clash. Even if you have been successful partners until this point, you may recognize signs that there will be conflict in the future.For example, maybe your partner wants to retire, but you want to keep the business running for a few years more to save more for your own retirement. If you want to buy your partner out of the business you own, there are several steps that you may want to take to improve your chances of success and reduce the conflict involved.

Review your partnership agreement before taking action

Reviewing any written contracts between the two of you may refresh you on terms that you set years ago and no longer remember. You may already have requirements in place for conducting a buyout, and you will have to comply with the contract in most cases.

Get a good idea of the business's value and future prospects

Both you and your partner have made financial and work investments in the company. You both want your fair share of the company's value. In the case of a buyout, your partner will likely expect to receive a fair portion of the current value of the business and at least some share of its future earning potential. You will need to go over the figures carefully to determine what kind of offer is appropriate.

Make sure you give yourself the flexibility to compromise

Approaching what will likely be a difficult conversation pragmatically and calmly is important. You want to have a rational and reasonable discussion about this change in leadership with your partner. The chances are good that the two of you will need to negotiate in order to reach an agreement.Successful negotiations often depend on starting from a position where you have room to make concessions. Don't start out with the highest offer possible, but rather a reasonable but lower one. That way, you can increase what your partner receives if they initially prove resistant.Getting help with reviewing your existing contracts and with drawing up the documentation for the buyout will help protect you during this vulnerable transition time.