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What To Do When Partnerships Go Bad… Very Bad

What do you when the honeymoon is over and you discover that you’ve gone into business with a snake?

Alan Knott-Craig




Q: My business partner is trying to screw me out of my business. I approached him a month ago to say I wanted to chase a different path, and sell my minority stake. It’s worth R1 million, but the shareholder agreement says that if I resign he has a call option to buy the shares for nil. His response to my request to exit was that he would exercise his option and pay me nil. What should I do? Should I stay? Should I walk away from the shares with no money? Should I fight for what he owes me? I’m not happy in the company, but I can’t bring myself to write-off the value of my shareholding. — Anonymous

Know who you’re partnering with

I have bad news for you. You’ve lost your money. Kaput. Gone. Minority shareholdings in unlisted companies are worthless, unless you’re in bed with honourable people.

If your majority shareholder is a crook, you’re screwed. You can’t sell to someone else, and a crook won’t do a fair deal to buy you out. If you stay, you’re delaying the inevitable.

You will be screwed. Rather leave now than later. Rather be happy than hang onto the promise of a pot of gold that never materialises.

Focus on creating new wealth

You’re an entrepreneur, so you have the instinct to fight. To never give up. To persevere. This is one of those times where your instinct is wrong. If you fight, you’ll end up in the mud with a pig. Pigs love the mud. He’ll enjoy it, you won’t. Worst of all, you’ll invest energy in trying to regain what you had rather than creating new wealth.

It’s a bit like trying to win back the girlfriend who cheated on you, rather than going out and finding a new girl. Rather find a new girl.

Don’t seek revenge or short term satisfaction

Once you’ve accepted that staying is not an option, and nor is fighting, the next reaction is revenge. “Damn it, I’m going to punch him in the head!” Short-term satisfaction. Long-term, it makes you look bad. And maybe you go to jail.

The best outcome you can hope for is that your story gets traction in your industry/circle of friends/town before his story. Believe me, he has already told everyone he knows that you’re unethical and screwed him. That’s what crooks do.

Related: 7 Ways To Quickly Spot The Wrong Partner (And 3 Tips To Get It Right)

Good luck fighting the war of whispers. Rather don’t. It’s bad energy. Who cares what people think. The people who care don’t matter, the people who matter don’t care.

Let your reputation define your achievements

In the end your reputation will be defined by your life’s achievements, not by the words of a crook. If you are a nothing, no one will care about his words. If you make it big, no one will care about his words.

If you want revenge, be successful. Success is the ultimate revenge. The rule for partners is this: Make it easy for them to screw you early. That way you don’t waste a whole lot of time with the wrong partners.

Whatever happens, remember this: Life is an adventure. It’s your choice how you describe your story. Is it a sad drama (‘Oh woe is me’), or is it a funny story with some speed-bumps and a happy ending? Frame your story as the latter. You hit a speed-bump, not fun. But not the end. The truth is that business is rough and tumble. So toughen up.

Don’t lose faith in your abilities

This is where it’s useful to have a loving spouse. With him or her at your back you can withstand anything. Whatever happens, don’t lose your self-belief. You have the magic.

You’ve had a bad experience in business. So what? You trusted someone. That’s not such a bad thing. You just got a bit unlucky that he was a crook. Next time lucky. But there is no next time if you lose your self-belief.

Winston Churchill lost all his savings to financial con-men in 1929. He said he was faced with two choices: Fight to get back what he lost, or make more money. He decided to make more money. Keep moving forward. Don’t look backwards.

PS: The best way to deal with a crook is to play dead. Cut him loose. Don’t engage at all. Just play dead.

Related: 5 Things to Do Before Saying ‘I Do’ to a Business Partner

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Read by Alan himself, Be a Hero is a collection of stories on how to make your life an adventure but also changing your mind-set and tackling adversity.

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Alan Knott-Craig is a successful entrepreneur and best selling author. Founder of over 20 companies in the tech space, he was named as a Young Global Leader by the World Economic Forum in 2009. To find out more about Alan’s new book, The 13 Rules for Entrepreneurs, go to



Selling Your Business To Your Business Partner

Follow these tips for creating a deal to sell your business that both you and your business partner will be satisfied with.

Mark J Kohler




The following excerpt is from Mark J. Kohler and Randall A. Luebke’s book The Business Owner’s Guide to Financial Freedom

Selling your business to a partner is probably the most common ownership transfer among small businesses. The reason is, your partners have a clear picture as to the value of the business, its potential, and what they need to do in order to replace you in the operations.

Selling to a partner is often one of the easier transfers to handle legally – not that partners don’t have their battles and disagreements – but most buying partners want to make the transition smooth and get the selling partner out quickly and painlessly. Many times, I feel that partners are amenable and anxious to define the transaction and process so that they themselves can utilise the same method with a good conscience in the future.

The document that typically lays the groundwork for a partnership sale like this is called the “Buy-Sell Agreement.” These types of agreements are drafted daily by law firms around the country and are actually implemented for more reasons than a partner wanting to sell.

Related: 4 Essential Steps To Take To Successfully Sell Your Business

In a more elaborate Buy-Sell Agreement for a more mature or established partnership, the document will cover issues of divorce, death, disability and a requested departure or exit. I call these the “Four Ds,” and each is important to address with predefined terms.

The primary purpose of the Buy-Sell Agreement is to define the procedure for the transfer of ownership, price, terms and transition well in advance of any event causing a transfer. This is a powerful tool because it prevents a partner from holding another partner hostage at a price or process in the heat of emotions when the transfer is needed.

For example, if all partners understand the process to determine the value well in advance, then they can work more clearly toward increasing the value of the business. Each party also knows that they’re all held to the same equation and process no matter what side they’re on. This way, it will be fair when the time comes for each partner to leave the partnership (at least, that’s the goal of the document and can certainly minimise the chance of a lawsuit). Following are some details you need to know about the Buy-Sell Agreement.

Determining the value

Most Buy-Sell Agreements require the partners to agree to the value of the company on an annual basis and record it in the annual partnership meeting. This may seem arbitrary, but if everybody agrees (typically requiring a unani­mous vote) and everyone knows the value applies to every­one, then who cares what anyone from the outside thinks? If the partners can’t agree, then a third-party appraiser is brought in to do a formal valuation if a buyout is triggered during the upcoming year.


Oftentimes, the terms are based on a note, with interest, paid out over five to 10 years. This can obviously create the retirement income a partner is looking for, and over the period of payments, it will spread out the tax bill as well. Some Buy-Sell Agreements require the remaining partners to obtain a loan for a good portion of the purchase price and then finish off the rest with a Note. This allows the departing partner to invest the initial money received wisely to create additional cash flow and prepare for when the payments under the Note end.

First right of refusal

Typically, there’s a first right of refusal that must be given to the remaining partner(s) when a partner wants to leave or sell. This means that before a partner can run out into the open market and look for another buyer, they first have to offer their ownership interest to the other partners. This obviously can create some hurdles for the partner wanting to sell because they first have to find a third party willing to buy into a partnership where they may not be welcomed with open arms, probably be in a minority position, and then have to wait around for the other partners to exercise their first right of refusal. But, again, it’s a protection mechanism that “cuts both ways” and protects all the partners.

Related: The 6 Most Common Questions Business Owners Ask Before Selling Their Business


To protect both parties, there can be a provision requiring the departing partner to sign a noncompete, and also the remaining partner or partners to “pledge” the partnership interest they purchased as security or collateral for the Note they’re paying off. Thus, if the buying partner(s) defaults, the selling partner can come back into the company as an equity partner to try to recover the remaining sales price or value sold in the original agreement.

It’s OK for a partnership not to have a Buy-Sell Agreement in place, but it can increase the tension in the case of a partner selling when the remaining partners didn’t foresee the situation and don’t have the wherewithal to buy out their partner. In these situations, I tell the partners to turn immediately to their partnership agreement (typically an LLC Operating Agreement) to understand what the governing document allows for when it comes to a partner who wants to get out or sell.

If you’re in a partnership and you have the slightest thought that you might want to sell in the next 10 years, and your partner might just be the buyer, then implement a Buy-Sell Agreement immediately. Don’t mess around with the disaster that can be created in a partnership when it becomes volatile or a partner up and decides they want out.

This article was originally posted here on

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The Foundations Of Growth

How Jurie Venter has focused on working with the right partners and doing thorough market research to achieve business success.





Vital stats

  • Player: Jurie Venter
  • Company: umAfrika Gaming Technology
  • Est: 2014
  • About: umAfrika is the provider of Gaming Products and Services to South Africa and all other countries in Sub-Sahara Africa and the Indian Ocean Islands.

Three years ago, umAfrika Gaming Technology co-founder, Jurie Venter split from an international company to start a more locally focused business. umAfrika bought a going concern in the South African gaming market. It was a great opportunity with one big catch: They had to launch with an ageing international infrastructure.

Look for opportunities

Although leaving a large international brand and all the support it offers can be daunting, Jurie understood his goals, and how he aimed to get there.

“Although there was a shift from an international focus to a local one, the foundation of the business stayed the same, with the added benefit that we now had local shareholders and could service local businesses.”

Related: Listen And Learn: Why Podcasts Aren’t Just For Start-up Founders

Jurie knew he could build a strong business because he had done thorough research into the South African market. The international market was similar enough to South Africa to prove the concept, and research revealed the local market was large enough to offer a great opportunity.

The Lesson: Make sure there is a need for your offering. By international standards, South Africa is a relatively small market. Jurie and his team needed to ensure there was a large enough local market before they invested in support, staff or infrastructure.

Partner for success

“It’s very important to work with the right partners,” says Jurie. “Focus on developing long-term relationships wherever you can. You want a partner that is reliable and has the right tools to help and enhance your business. I want to know that whenever I pick up the phone to a supplier, there is always someone on the other side who can help me.”

What’s the secret to building such great partnerships?

“Be honest and open in your business and partner with companies that are honest and open with you,” says Jurie.

“For example, we have an excellent partnership with Introstat, which had been building momentum for a few years — long before we created our own independent business. What’s been phenomenal is how we’ve grown together. When they first came onto our radar they only supplied printers. Over the years Introstat has grown into the areas that we needed to grow and enhance our business. We’ve been able to walk this path together.”

The Lesson: As a start-up or SME, you will often work with service providers who are also on a growth path. Work together — with the right relationship and support, you’ll actually grow together. This can work in a number of ways. Your support allows your suppliers to grow and extend their product and service offerings, which then helps you to expand, or in other cases, clients expand overseas and can take you with them. Partner with a business that you can develop a close relationship with, someone who is reliable and has your best interest at heart. The best way to do this is to ensure your values are aligned. Relationships and support are the foundations of business. Build these with your suppliers and your clients — look at business holistically.

Related: The 10 Best New-Age Business Ideas You Haven’t Heard About Yet

What Introstat can do for you:

  • Years of ICT sector experience brought forward to help you grow your business
  • As an HP Platinum Partner Introstat has access to the full range of HP products from Hardware, Software, Networking  to HP Financing and leasing options
  • Through its consulting expertise, Introstat determines the finest solution for your business
  • Introstat has a team of qualified engineers  that can service and maintain your printer fleet and ICT environment nationwide
  • Offers both onsite and remote technical support
  • Provides services within IT Security, Managed Print, Networking, Server/Storage, Cloud, Hosting, VOIP and IoT Connectivity
  • Introstat is a Premium supplier of PCs, laptops, printers, ink and toner with a national distribution infrastructure
  • A BBBEE level 1 company.

Let Introstat show you the new HP A3 Multifunctional range, the most secure printing devices in the world.

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Make Absa Your First Business Partner

Thinking of starting your own business? We’ll help you think further with a start-up plan, funding, payroll guidance and Enterprise and Supplier Development solutions for your business.






Thinking of starting your own business? We’ll help you think further with a start-up plan, funding, payroll guidance and Enterprise and Supplier Development solutions for your business.

Firstly, consider opening an Absa Business Banking Account by choosing from our range of tailored transactional account options online. You’ll be able to make and receive payments through multiple channels that make your banking as hassle-free as possible with our cash handling solutions and merchant services.

Plus, if you are a new business owner you can open any of the business accounts we offer online, register your new company with the Companies and Intellectual Property Commission (CIPC) and get a South African Revenue Service (SARS) tax number in one go.

Related: Business Partners Limited Explain What It Takes To Have The X (Fundable) Factor

A business plan is also essential for every entrepreneur, as it forms the roadmap of how your business will achieve its goals and should include its operational, financial and marketing strategies. Our team of experts will always be available to give you all the assistance you need with your business plan.

Once you’ve drafted a comprehensive business plan and you are ready to venture into the world of business, your next step is to register your business as mentioned. SwiftReg assists with checking existing company names and registering your company’s name, B-BBEE certificates, clearance certificates and more.

We also offer advice to franchisees, whether you’re thinking about buying a franchise or want to turn your existing business into a franchise network. And, if it’s funding you need, we’ll work with you to find the right solution. Our business funding solutions cater for start-ups and existing small, medium and micro enterprises (SMEs) with working capital or expansion finance needs.

Related: 10 Questions to Ask Before Committing to a Business Partner

Lastly, when you need help moving your fully-formed business plan in the right direction, you can visit any of our Enterprise Development Centres across South Africa to build and grow it from inception until maturity through unlocking access to financing, markets and business development support services.

For more information or to open an Absa Business Banking Account online, visit our website.

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