I have a partner that wants out of our ‘business relationship’. I will ‘happily’ let her out; however, I have a dilemma. I have no clue as to how much I should give her as a buyout amount.
Here are a few details:
The property is a 3BD/2BA condo and currently has about $140K left on the loan. The unit IS the largest one in the development. I state this because another 3BD/2BA ‘just’ sold for $280K. ;D
Is there any type of formula that I can use to determine a decent buyout price or just spit out a number and call it a day?
We are currently beginning the refinance of this investment property and I could always take some equity out of the property to give my business partner as a buyout amount. Any and all suggestions are appreciated.
There is really no way anyone here can give you a good answer to that question.
I have no clue has to how the partnership is structured, the terms of such, how much time/money/etc each put into, etc. etc.
All of these play a factor in determining value.
The best advice that I can give is to simply ask what she wants to get out. The answer may surprise you.
Raj
millions or bust,
This reply may be to late to help, but here goes:
Business is a two way street.
What she is asking as a buy arrangement, she needs to be willing to buy you out for the same.
I would tell her to write up what she thinks is fair and be prepared to exacute and buy you out under the same terms, if you are not willing to accept.
Moneytalks
I’m a CPA and I do tax work for multi-billion dollar hedge funds and private equity funds. There are numerous methods that could be used to calculate the value of the partnership. I am in the process of forming a partnership and was thinking about the problems of a partner terminating their complete interest. Usually the method of allocating gains and losses, distributions and terminating the interest should be stated in the agreement. If there is no agreement and this has not be resolved send me an email with more details and I’ll give you my thoughts.