Buying my partner out of the business

UPDATED: Oct 1, 2022

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Buying my partner out of the business

My business partner is moving and wants to be bought out of the business. Currently it is a 50/50 partnership. The problem I am having with figuring out how much 50 of the business is worth is it is a cash business and we are currently doing it under the table No taxes being paid. We do not have any paperwork or documents that show our profits and how much the business has made since the end of February. I know my partners amount that he wants is going to be high but I do not want to pay too much for a company that doesn’t technically show profit.

Asked on September 18, 2017 under Business Law, Colorado


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

There are many different ways to value a business: based on assets; based on cash flow (different from profit); based on projected future earnings or profits; etc. An accountant or business consultant with experience in valuing businesses can apply the correct formula for the nature and age of your business.
If you and your partner cannot between yourselves work out a price you are both content with, hire an accountant or consultant with experience in valuing business--the two of you can agree on the person, so you both have buy-in--and go with the price he or she comes up with.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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