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I have been working with a business cofounder for about a year and it is time for me to let him go. We were supposed to get funded and we never did. So, I am thinking of terminating the company and starting anew. Do you have any suggestions as to how I terminate the company as the main founder? Can I do it without his consent? The other cofounder does not want to terminate the company at this time and would like to take the IP of the company with him. Any idea? |
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Yes. Where do you get the idea you can terminate his ownership percentage without paying for it? He owns whatever percentage of the IP he has in shares. Just throwing him out is one thing: theft. Try to buy him out, or find some split agreement. |
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Did you create and sign a partnership agreement? If so it will detail in there exactly what is required to get the other partner out. It may require a buy out of other provisions. If you do not have that in place then this could get ugly. Be fair and try to come to a mutual agreement that works for both parties as you have both put time into the project. |
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You don't have a company if it wasn't incorporated. A company that hasn't been incorporated cannot issue stock. Thus neither of you has stock. Think of yourselves as two individuals that have some IP. You'll need to find a way to pay each other for your respective shares of the IP and anything else that you have. |
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Take the friendly approach "I know we were expecting to get funding but it doesn't look like this endeavor is going to work out. I'm interesting in dissolving the company and parting ways on this venture. Should we have an idea in the future I would be interested in discussing it. " Then pick 1 of the follwing ;) "Since we were both involved in creating the IP we can both take a copy and do with it as we please if that works for you?" "I doubt I'll do much with the IP here but I'll give you $X for the rights to it" "If you want the rights to the IP you can buy my interest in it for $X, otherwise I'll buy it from you for that price" (kind of a shotgun clause) Then sign some papers, have a witness, get rid of that dead weight and go make your millions :] |
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I was just reading in the TechStars book about this. This is why they make the suggestion that owners vest stock over time, instead of owning it all 100% right off the bat. Makes sense, in retrospect. |
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If he doesn't want to terminate the company, why don't you leave? Keep a token ownership for what you have invested in time and money and let him make it go (if he can). Move yourself out to do other things. If he really can make a go of it you win. If you want to terminate him because he is a boat anchor then that is a whole different can of worms. Hard to tell from the question the way it was asked. |
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