Business buy out advice

[PhilBeech]

This is a truly tragic for all concerned, you all have my deepest sympathy.

 

I've given this a little thought since you first posted this thread.

 

I have come to the concussion that there is only one course of action that could not lead to any future strife.

 

If I were you I would freeze the "Business", "Company", "Partnership", I'm not sure that what you and your bother had conforms to any of these, but you SIL does, so to avoid upset I'd just accept her definition. I would then suggest you sell the whole thing, "as is", "lock,stock and barrel" and then split the proceeds. In this way you are putting yourself and your SIL very much "in the same boat" so to speak.

 

This way there is no scope, now or in the future, for you SIL to feel short changed.

 

Your business was YOU and your BOTHER, it was you two who bought in the work and you two who did the work and thus generated the income, unfortunately your bother revenue generating ability died with him. It appears your SIL thinks the business generates its own revenue, to which she is entitled, unfortunately small tree firms don't really work like that, sure being established make finding the work a little easier, but the work still has to be done in order to turn any enquiry into profit.

 

Trying to convince your SIL that the business has very little value and that it does not throw off any passive income could be very difficult. The easiest way to find any items true value is to sell it.

 

Obviously I don't know your circumstances and you may not be able to do as I suggest, but IMHO it would be the best long term solution. At least this way you and her are both in the same position, there is no scope for any future claim on yourself.

 

Could you just sub out for now and then start up again in the future?

 

Business with family is notoriously difficult, the relationship with you bother must have been very special and must make your loss all the worse, I really hope you can resolve this situation in the least painful manor for all concerned.

 

I completely agree here. I really cannot see what other options you have. Sadly, once grief fades opinions change. When you lost your brother, you lost the business as well.

 

Draw a line under it and start a fresh. You still have your clients details. Best of luck, very sorry for your loss. Makes you think.

[Andy Collins]

Huck, one of the most sensible, logical and reasoned posts I think I've ever read on this forum.

[Marko]

Huck, one of the most sensible, logical and reasoned posts I think I've ever read on this forum.

What he said

[WorcsWuss]

This is a truly tragic for all concerned, you all have my deepest sympathy.

 

I've given this a little thought since you first posted this thread.

 

I have come to the concussion that there is only one course of action that could not lead to any future strife.

 

If I were you I would freeze the "Business", "Company", "Partnership", I'm not sure that what you and your bother had conforms to any of these, but you SIL does, so to avoid upset I'd just accept her definition. I would then suggest you sell the whole thing, "as is", "lock,stock and barrel" and then split the proceeds. In this way you are putting yourself and your SIL very much "in the same boat" so to speak.

 

This way there is no scope, now or in the future, for you SIL to feel short changed.

 

Your business was YOU and your BOTHER, it was you two who bought in the work and you two who did the work and thus generated the income, unfortunately your bother revenue generating ability died with him. It appears your SIL thinks the business generates its own revenue, to which she is entitled, unfortunately small tree firms don't really work like that, sure being established make finding the work a little easier, but the work still has to be done in order to turn any enquiry into profit.

 

Trying to convince your SIL that the business has very little value and that it does not throw off any passive income could be very difficult. The easiest way to find any items true value is to sell it.

 

Obviously I don't know your circumstances and you may not be able to do as I suggest, but IMHO it would be the best long term solution. At least this way you and her are both in the same position, there is no scope for any future claim on yourself.

 

Could you just sub out for now and then start up again in the future?

 

Business with family is notoriously difficult, the relationship with you bother must have been very special and must make your loss all the worse, I really hope you can resolve this situation in the least painful manor for all concerned.

 

The issue I see with this is it's a bit 'chicken and egg'.

 

1. So the 'business' freezes and goes on the market. It will therefore stop generating income and therefore will have no value, this will mean that it does not sell, so the only solution is to dispose of all the assets. This process could drag on. This will likely generate very little cash - certainly not enough for Jose to set up again on his own - but probably a good deal of resentment. Doesn't this need resolving quickly for all involved?

 

2. While the 'business' is frozen and on the market, Jose will stop earning an income from his established workbase - so how will he live? Obviously by subbing....

Of course, I'm guessing he can't afford to buy all new equipment so surely he will need to continue using his existing kit / assets [ie the ones which belong to the 'business', or in other words are half owned by his brother's estate] to earn a living. Should he pay a hire charge to the 'business' for the use of the equipment? What about any repairs as a result of his continued use of the tools, or further depreciation?

 

3. Presumably this subbing work will be done for existing clients, but by rights should these existing clients not be ringfenced and be separated as the 'business's goodwill' as part of the 'sale'.... ?

To keep things above board then he will need to be working either as a sub contractor to his own 'business', which has been frozen and taken on an identity of its own, or completely new clients.

Who would get the income from any work for the old organisation, both Jose and his sister in law? How do they set Jose's wage? And does any profit stay in the 'company' to be passed onto the purchaser as working capital? Or do the two of them keep taking it out as it is generated?

 

The problem with this scenario as I see it - apart from the potential for it to turn into a drawn out mess - is that there is no 'business' to sell or freeze. Only cash and assets.

These two things need to be divided straight down the middle as they would be if Jose and his brother had previously chosen to go their separate ways.

 

This can be done either based on a valuation whereby Jose makes a lump sum payment to his brother's estate [and it's the estate, not his brother's wife who should be paid] for his share of said assets and profit - along with any unpaid wages and profits, OR, everything needs to be sold individually and the revenue divided equally.

 

Strikes me though that Jose will end up a bit screwed if everything gets sold off, as he'll be given half the realised cash [eventually] but only to the value of the equipment he needs to work as it is now in its depreciated second hand condition, and not what he [presumably] paid for it in the first place, which he will then need to outlay again to replace it.

 

I'll say again, I think that talk of a 'business' [and its sale] needs to stop.

It's just the cash and assets. And in order to continue earning a living Jose needs to hold onto his assets by purchasing his brother's share from the estate.

 

To do this, one option would be to sit down with his sister in law and search through completed listings on ebay for the items he has, arrive at an average fair market value, of which half can be paid to the estate by Jose.

 

Any as yet unpaid wages are easy to calculate, and profit ytd [if any] can be read from the end of year accounts - which presumably are being done around now?

 

That should then be the end of any financial involvement with the brother's estate.

 

An oversimplified solution perhaps, but in my view the fairest to both parties.

As tragic as it is for Jose's sister in law to be in this position, Jose has lost someone just as important in his life and how he is treated is equally important as how his sister in law is, perhaps even more so.

After all, without wishing to sound harsh, she will now be entitled to some financial support presumably as a single parent, plus any insurances which may [or should] have been in place.

 

As if losing his brother wasn't bad enough, Jose now gets nothing but stands to lose potentially even more.

 

I really hope it all works out well for you all mate, and your neice and sister in law. You all have all our sympathy.

[JonnyVine]

The issue I see with this is it's a bit 'chicken and egg'.

 

1. So the 'business' freezes and goes on the market. It will therefore stop generating income and therefore will have no value, this will mean that it does not sell, so the only solution is to dispose of all the assets. This process could drag on. This will likely generate very little cash - certainly not enough for Jose to set up again on his own - but probably a good deal of resentment. Doesn't this need resolving quickly for all involved?

 

2. While the 'business' is frozen and on the market, Jose will stop earning an income from his established workbase - so how will he live? Obviously by subbing....

Of course, I'm guessing he can't afford to buy all new equipment so surely he will need to continue using his existing kit / assets [ie the ones which belong to the 'business', or in other words are half owned by his brother's estate] to earn a living. Should he pay a hire charge to the 'business' for the use of the equipment? What about any repairs as a result of his continued use of the tools, or further depreciation?

 

3. Presumably this subbing work will be done for existing clients, but by rights should these existing clients not be ringfenced and be separated as the 'business's goodwill' as part of the 'sale'.... ?

To keep things above board then he will need to be working either as a sub contractor to his own 'business', which has been frozen and taken on an identity of its own, or completely new clients.

Who would get the income from any work for the old organisation, both Jose and his sister in law? How do they set Jose's wage? And does any profit stay in the 'company' to be passed onto the purchaser as working capital? Or do the two of them keep taking it out as it is generated?

 

The problem with this scenario as I see it - apart from the potential for it to turn into a drawn out mess - is that there is no 'business' to sell or freeze. Only cash and assets.

These two things need to be divided straight down the middle as they would be if Jose and his brother had previously chosen to go their separate ways.

 

This can be done either based on a valuation whereby Jose makes a lump sum payment to his brother's estate [and it's the estate, not his brother's wife who should be paid] for his share of said assets and profit - along with any unpaid wages and profits, OR, everything needs to be sold individually and the revenue divided equally.

 

Strikes me though that Jose will end up a bit screwed if everything gets sold off, as he'll be given half the realised cash [eventually] but only to the value of the equipment he needs to work as it is now in its depreciated second hand condition, and not what he [presumably] paid for it in the first place, which he will then need to outlay again to replace it.

 

I'll say again, I think that talk of a 'business' [and its sale] needs to stop.

It's just the cash and assets. And in order to continue earning a living Jose needs to hold onto his assets by purchasing his brother's share from the estate.

 

To do this, one option would be to sit down with his sister in law and search through completed listings on ebay for the items he has, arrive at an average fair market value, of which half can be paid to the estate by Jose.

 

Any as yet unpaid wages are easy to calculate, and profit ytd [if any] can be read from the end of year accounts - which presumably are being done around now?

 

That should then be the end of any financial involvement with the brother's estate.

 

An oversimplified solution perhaps, but in my view the fairest to both parties.

As tragic as it is for Jose's sister in law to be in this position, Jose has lost someone just as important in his life and how he is treated is equally important as how his sister in law is, perhaps even more so.

After all, without wishing to sound harsh, she will now be entitled to some financial support presumably as a single parent, plus any insurances which may [or should] have been in place.

 

As if losing his brother wasn't bad enough, Jose now gets nothing but stands to lose potentially even more.

 

I really hope it all works out well for you all mate, and your neice and sister in law. You all have all our sympathy.

 

This has to be the most logical way forward with this and would prevent any future complications/upset

[skyhuck]

I hear what your saying WorcsWus, but it seems the sister in law feels the "business" has high value and generates passive income, the only way she can been shown this is not true it to put it up for sale.

 

A subie climber needs no identity but their own name, bank account and UTR.

[adbat234]

If your SIL wants a part of the profit the company makes i can understand this. As she is an accountant i think it only fair that she can run the books for the business, keeping the financial turnover totally transparent for her and you.

Obviously her cut of the profits must be minus the cost of hiring a sub contract climber and she must accept that maintaining equipment, quoting etc... is also part of working for the compamy and as such you are entitled to a larger share as this will be wholly your responsibility and your time out in the rain doing so.

She sounds an intelligent woman and she should be able to see reason in your methods. Failing that its onto what huck said.

I hope you can both find a common ground on this one as you have both had a big enough loss without the (In some cases i have known) Anomosity that who is due what from the deceased estate that sometimes arises in these situations. Good luck

[Timbermcpherson]

Do what your brother would want you to do, and what he would do in your situation.

[jose]

ok been chatting a bit and a option has been raise.

 

SIL would sign over her share to myself providing the folowing:

We get the company valued. What ever the value is 50% will be paid to my neice if and when the company should cease to trade.

 

I will employ the SIL to do all accounts, tax returns etc. For this she would receive a monthly wage ( arguments sake £350 PCM).

 

All other money generated she would have nothing to do with.

 

This is not set in stone in any way and i will still be seeking professional advice.

 

Cheers

[skyhuck]

ok been chatting a bit and a option has been raise.

 

SIL would sign over her share to myself providing the folowing:

We get the company valued. What ever the value is 50% will be paid to my neice if and when the company should cease to trade.

 

I will employ the SIL to do all accounts, tax returns etc. For this she would receive a monthly wage ( arguments sake £350 PCM).

 

All other money generated she would have nothing to do with.

 

This is not set in stone in any way and i will still be seeking professional advice.

 

Cheers

IMO, £350, is way too much, I pay £200 including VAT and that includes vat returns, payroll, tax returns and working family tax credit etc.

 

Also I'm not sure it's a great idea for her to become involved in YOUR business, if I were you I'd really try to get clean break.

Edited May 15, 2013 by skyhuck