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Thank you. I've hoped to resolve this peacefully and I plan to continue along that way. I'm pretty short on money right now, so getting couple thousands for a buyout or as a share of the sale of the company/source code is pretty significant for me and missing on it would be a real blow for all that work.

I cashed out of my private company a few years back. Advice that me & my partner got was that I should leave with no equity, as any ownership stake I retained would feel like there was still a business relationship where I had a say. The deal my partner worked out for a sale was a fixed price of X. 25% of the sale price of immediately, and the rest was worked out as a deal where I'd be paid out over 18 months. It worked great. Lawyers and tax people helped with the legalese and taxes.

Thank you, the thing with scheduling payments over some sounds good to me, I'll try to propose it to Jim

A couple tips:

- After negotiating a ballpark sale price, I was advised to get an attorney, and that was excellent advice. The attorney cost 10K or 20K, and it was worth every penny. My partner trusted each other enough to share an attorney we had worked with previously. I trusted the attorney to work with both sides, even though the attorney was probably representing the business more than myself.

- Any exit plan that involves deferred compensation should be crystal clear, and I encourage you to focus on discreet payments that do not require you audit the company's finances, as it's a lot easier for both sides if the only thing you have to do is cash a check (e.g. you receive a fixed payment of X regardless of how well the company does, and avoid things like you get X% of sales over a certain period)

- just keep in mind that you and your partner will likely have wildly different ideas about the company valuation

- one option you can consider is staying with the company and offering to buy out your partner. My partner was the one who originally wanted to exit, but she ended up buying me out, and it worked well for both of us!

- be nice (or at least civil) throughout the process, as breaking up will be hard, and you need trust to be preserved to feel good that any deferred payments are likely to happen. Also, you might wanna work with each other again in the future.

- don't negotiate an exit payment so high that the business might not be able to pay it

Thanks! I don't have money now to afford a lawyer, and even if I did, it's possible that I'd pay more for a lawyer than potentially get in cash or equity

Jim would never leave me the company and frankly, I have no interest to stay even without him

I don't know what kind of money you're thinking of (you mentioned a couple thousand dollars), if the sum is relatively small - eg $3,000 or less - I would not schedule payments over time. Try to get the partner to pay you out immediately and walk. If it's a larger sum, it might make sense to schedule it into payments (particularly if it means a consequentially larger payout). The ideal is to have no outstanding agreements whatsoever between you and Jim. Next week or next month when the app fails (or xyz happens), he might decide he doesn't think you're owed the rest of the payout because of said failure ('but the thing no longer exists, I am not paying for something that failed!'). It's a lot of bullshit for $3,000 in regards to a contract and payments over time. If he decides to stop paying for any reason, now you have to consider suing him, which is a lot to go through for $1,000 or $2,000 or whatever is remaining (more likely the balance is lost at that point).

Right now Jim probably thinks there is serious value in the app. The odds are overwhelming that isn't true. While he believes that, your likelihood of getting paid are dramatically higher, so again go for the 100% immediate payout if you can.

Thank you, good point. I'll try to get as much upfront as possible

For context, my payout was $200K USD. Small enough that the business could swallow the cost and pay out of savings and cash flow (50K upfront, and 150K deferred).

Then maybe start there!

Something like (obviously don’t use these exact words) “Hey Jim, I know it’s a drag that I’m leaving the company like this. I’m sad I have to go too. I know it’s messy if I retain equity, but is there any way you could pay me a buyout to reflect some portion of the hours I’ve put in so far? I’m pretty broke and it would make a huge difference.”

Then if Jim honestly feels that is fair, and he (very big consideration) feels like he can actually afford it, he might just do that.

The number, in that case, will probably be lower than you imagine. Because everyone tends to value their time highly and other people’s time less so.

But it would sidestep any fighting, and Jim will feel less resentment because it was genuinely his choice.

Or he will say absolutely no. But again that’s what you’re likely to get no matter how much you fight, the only difference being the damage done by fighting.

And in either event, whatever Jim does, you can focus your mind on your next thing in life.

Edit: Because remember, starting a company always had the risk you would work a whole bunch and end up with nothing to show for it.

Right, thanks!

Walking away enables you to drop the rock. I don’t mean to gloss over the value of your contribution. But it seems you have done the cost to benefit analysis and have decided to move on. You’re saying additional risk is not worth it. Or in your estimation the company is not worth your continued efforts, aka worth $0 to you.

Either find some consulting work and work something out with Jim to stay in the game, or cede all the risk and reward to him. Building a company isn’t for wimps. My apologies for my brutality, but I’m actually in your position and see it from my Jim’s perspective.

>I'm pretty short on money right now, so getting couple thousands for a buyout

For two years of fulltime work or are we misunderstanding?

You own 40% of this company without encumbrance and you have it in writing in an official corporate registration document filed with your government, correct. If this company is worth anything at all your 40% is worth vastly more than a couple thousand. You could sell your rights to a third party.

Also, everything the partner did, and which you did, as a registered legal partner, is owned by the company. Not by him, not by you. The company. He can not claim it is his and take it elsewhere. That would be illegal. You own 40% of the value of the software code, just as he owns 60% of the work you did.

All the endemic downvoters here should explain why for two years of full time work that brought this company to the point where it can be sold by a cofounder is only worth at most $2000 total and you yourselves (state your legal name) would be happy yourselves with the deal you are pushing to this guy.

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