Hello, below is a case study of my real life situation. My business of
3 years is going through a break up. One partner is leaving and the
question is how much he gets. I changed names to protect the
innocent:-) I would prefer an answer from someone who has experience
in partnerships. Internet business experience would be a plus.

Bob and I have been friends since high school, over 12 years now. In
October 25, 2002, I got fired from my job selling computerized cash
registers. I promptly started my own business doing the same thing.
 
My idea was to sell point of sale (POS) systems on the internet. I
recruited my close friend from high school to be a partner of mine.
The deal was he would do the website and I'd do the selling. It was a
longshot but he agreed.
 
For 6 months I worked full time on this business, making contacts and
getting some sales. Bob had a full time job but would work on the site
in his spare time. Eventually things got good where we could both make
a living doing this so Bob quit his job in NYC and came to my parents
house to work full time with me.
 
Our profits were $90000 in 2003, $130,000 in 2004 and $200,000 in 2005. 
 
Bob felt isolated in the town we were working in (northern NJ) and
wanted to move the business to Hoboken which has more going on. I said
I'm happy where we are. He proposed that if I want to stay where we
are then I should buy him out. I thought about it for a couple hours
and decided that was the thing to do.
 
Our business model is such: We get over 95% of our leads from the
internet. People are either looking for complete pos systems or just
hardware (printers, scanners, touchscreens). Potential customers will
download our software and then call us up to have us walk them through
it. Or, they know our product already and call up to buy. We also sell
lots of hardware to big companies, government orgs, and retail shops.
Our target customer is a retail store or small restaurant .
 
Our margins are low but we give great customer service. Maybe as much
as 35-40% of our business is from reorders. But for the new business
almost everyone finds us on the internet.
 
Bob and I are 50-50 partners. We do all the work ourselves. No
employees, so as our customer list has grown, we have been stretched
thin. We do everything from running credit cards to licking envelopes
closed. I primarily do sales. I follow up on leads, write up quotes,
provide customer support and limited technical support. Bob is in
charge of the website, he updates it adds new pages. Our website
enjoys very high rankings in search engines (google, yahoo, msn). For
many of our keywords (pos hardware, barcode scanners) we are in the
top 10 results. Since 95% of our leads are from the internet, these
search engines, and our high results contribute to a high percentage
of our income. Bob is not a certifiable "webmaster" and does not know
all the computer languages, but learns fast (engineering degree) and
does a great job keeping the site tops in rankings by putting quality
content on the site. He takes great care whenever adding something to
the site to put in the right keywords and original material.
Invariably, when he puts a new product onto the site, it is listed on
the first page of the search engines within a few days. I find him to
be a virtuoso and these high rankings turn into money. Operating a
website is a delicate task and if the wrong person takes the helm, a
site can be penalized in the rankings. Such tactics such as
duplication, copycat material and poor design can sink a sites search
results.
 
So now we are splitting and the only thing we can come to an agreement
on is that we should split the money in the bank account. We have
drastically different ideas on how much he should get.
 
To take Bob's place, I would have to hire 1 or two full time sales
people, a bookeeper (he prepares the statements to go to our
accountant) and part -time webmaster and possibly more office space.
 
Our non-cash assets are minimal. Just computers, desks, office
equipment. All of our products are drop-shipped from warehouses so we
have no inventory. I would estimate after bills there's $50-$100K in
the bank.

My question is, how much should the leaving partner get.

---

Request for Question Clarification by cynthia-ga on 23 Mar 2006 01:01 PST

pokerdog,

My brother just went through the same thing, but his business was
making a bit more than twice as much as yours. In the beginning, they
were very polarized as you are now. It took about 3 months of
negotiations, but eventually they did agree. The final papers are
signed by one party now and the other is signing in front of a notary
tomorrow. I can detail the process that led to a successful break-up.
I was my brother's advisor. He didn't always like what I told him, but
it did result in a break-up that was nearly attorney free.

Would you like me to do that as an answer to your question?

~~Cynthia

---

Clarification of Question by pokerdog-ga on 25 Mar 2006 12:39 PST

Hi Cynthia, sorry for the delay. The thing is, there's such a gulf
between what he wants and what I'm willing to give him. There's no
partnership agreement so whatever I give him is good will. I offered
him an amount I consider to be more than fair but he still is clinging
to "what the business is worth" if we sell it. But i have no intention
of selling it so that has no bearing on what he should take (or does
it?). We are in a different situation than other partnerships because
its only 3 years old, its a tenuous market, and its just the two of
us. Another idea we've floated is that he could sell his half and I
would take on another partner. I'm not sold on that though, because
what's to say I'm going to get along with a new person? It would have
to be someone in the industry, don't know if I want to train someone
(or maybe my partner would train him)

I'm really looking for an honest estimate of how much the leaving
partner should get based on our unique situation and the figures I
provided.

---

Request for Question Clarification by cynthia-ga on 25 Mar 2006 13:20 PST

You are way too focused on the problem, and you need to focus on the
process of the solution. Of course you're polorized! The "honest
price" is whatever you two can agree on, THAT is what is fair. My
brother certainly didn't want to pay his partner a DIME, didn't feel
he owed it.

Imagine this: It's YOU that is leaving. I know it's hard, but try to
imagine... how much would you want as compensation for your work, and
loss of future earnings? Would you take/accept the same amount you are
offering your partner, or does it now seem absurd?

Remember, you are left with a running business, a self-reported
success and a  cash cow, he is walking away without a job. If you
don't focus on finding a solution through the time tested, proven
method of negotiatiating with your partner, you'll end up with an
ex-best friend that you don't speak to, and lining pockets, one
attorney for him and one for you. There will be nothing left. Good
luck to you.

This is just a free comment.

Couldn't "Bob" continue to work on software from NY or NY, as he did
during the first months, and remain a partner in the firm?

Hi, thanks for your comment. What I failed to mention is that since
we've gotten so busy over the years, Bob does almost as much sales as
I do. The website he fits in when he can, but he's actually become a
pretty good salesman.

pokerdog-ga,
Hey I probably visited your website, as I was looking for a POS for my
brother in law who bought a small restaurant in France.

I don't think it matters who did what when you and Bob built your
business together. It took both of you to make it a success, and
congratualtions to you by the way!! Once "Bob" is gone, it is
irrelevent how many people you will need to hire etc., all of that is
irrelevent. What you contributed, what Bob contributed etc. None of
that is relevant. Just agree that both of you worked hard, put your
hearts and time into it, and hey big guy YOU (plural) DID IT!
Try not to look back and nit pick, well technically I did 5% more etc.
It is not worth it, believe me. Be fair and square with Bob, split
with him 50/50.

What is relevant is what is the value of the business now. That is
what you need to find out. You need to have the value of your business
determined then you need to come up with the money and buy out your
partner.

Rule of thumb is, a busines is worth 2 1/2 times the gross. You might
want to start a different question titled "How do I determin the value
of my business?"

You and Bob can select a couple different methods, hopefully you have
an accountant, and a review of the different valuations and a joint
meeting with your accounttant and you should be able to come up with a
number.

When you need to buy your partner out, consider gettig a Small
Business Loan, and SBA loan. You will qualify for one, don't be
intimidated, they are not all that hard to get. Use your SBA loan to
pay off your partner and stay friends forever!!!!!!!!!!

Hi myearin, in theory it could work since its mostly based on
telephone and internet, but I don't think people work as hard without
others around. Even though its internet based there's a strong
physical aspect of it. Need to talk to eachother face to face if we're
running a real business.

Pokerdog,
It worked for the first six months.  Of course, then there was a lot
of adrenalin flowing with the new project, but maybe it would be a way
to taper off, but probalby in recognition by you both that the
cooperation is going to end.
Maybe that could be worked in to what Cynthia can suggest  - maybe not.
I don't think you can do better than listen to her hands on experience.

Congratulations for your success so far, and
Good luck, Myoarin

This is a related question:

Subject: Selling a consultancy 
http://answers.google.com/answers/threadview?id=711720

There's a golden nugget in the attorney's comment:
..." Sales of service businesses generally occur at lower prices (as a
multiple of cash flow) than sales of manufacturing businesses with
valuable brand names, although this is not always the case..."

It IS related, you are buying 1/2 of the business from your partner.
In the two service businesses I have owned and operated, it was
customary that the multiple of income was to measure the GROSS REVENUE
in weeks, agree on a weekly average that trhe business brings in, and
times that amount by 50-60 weeks to get a FAIR sales price for 100% of
the business. Yes, one entire year of income!  This is customary!

Our asker probably wouldn't like my advice. My brother didn't either
in the beginning, --but he does now, --he's still got his shorts.

So what was the Gross in 2005? 
I am glad to see that my opinion of it doesn't matter who did what and
when, and what you will have to hire with your parter gone, etc. was
echoed by others. What matters is what is the fair market value of
your business. Then you split is with him 50/50.

It seems to me, and only my opinion, that you are trying to be cheap
with your partner. Youre statement of "what I'm willing to give him"
is a real bell ringer. As is, "There's no
partnership agreement so whatever I give him is good will" It is not
what you are willing to give him, it is what 50% of the value of the
business is. Look are you going to screw your best friend and business
partenr or aren't you? Initially when you wrote you were very up front
about your partners contributions, they were in fact equal to yours.
Then later on, you hedge and seem to feel that you are the "sole
owner" and you are being quite benevolent in offering your partner
anything. Look he wasn't on payroll was he? Did you pay him by the
hour? Did you pay him by the job? Bet not, bet you ran your
partnersiship together and shared the profits, as true partners.

I don't understand your reluctance, pay up the value of 1/2 the
business. I have said it is worth 2 1/2 times the gross. Cynthia
recomends 50 to 60 weeks of gross revenue. You are going to be left
with a great business, sole owner. You have all the future years
profits to keep just for yourself. If you want it all for yoruself
then you need to fairly pay out your partner. Frankly I think you are
being greedy, and not negotiating fairly with your partner. Especially
your statement of "whatever I give him is good will" it was not your
talents that put you up high in the google results. Give credit to
your partner and be fair. You didn't do this all by yourself.
Guaranteed, there are a h*ll if a lot of internet based businesses who
would LOVE to be on the first page of a Google Search. Do not negate
his contributions as being less than yours. Let me ask you this, how
successfull would your business be if you were on page 210 of a Google
Search? Your business is growing, every year you are increasing sales,
and hey GOOD FOR YOU!!!! Your partner is leaving a successful business
that he helped create, pay the man out fairly and it is going to be
big numbers. Focus on the value of your business, put your efforts
there. Accept the fact that he deserves 50%. Don't look back, pay the
money and look forward. I repeat what I said earlier you need your
accountant a CPA to help you determin the value of the business. There
is a reason they have the words Certified Public Accountant after
their name. A CPA must work according to generally accepted accounting
prinicpals or they loose their license. A CPA is not going to suggest
a low ball figure or a high ball figure, they are going to come up
with a figure that is generally accepted accounting principals. Just
as an attorney can loose his license to practice law a CPA can loose
their license, they work at arms lenght, and give an unbiased opinion.
Instead of seeing lawyers see your accountant. I wish you a dose of
reality (It is going to cost, and it won't be cheap, you have a good
business and it has value) along with much much continued success.

There is nothing like money to ruin a friendship.  
It's an awful thought, but have you considered that he could ruin your
company's software?  Treat him fairly, maybe even more than just
fairly.
1.  You seem to have a growing business; a factor on present turnover
to buy him out only partly recompenses him for his foregoing
participation in the future growth and profits of the company.
2.  You may need him to fire-fight at some point if your new webmaster
misses a beat.

Good luck, Myoarin

I feel that you may lose business considerably after breakup. Bob is
not geting business, you get it, so pay something more than you feel
right. However, best way is not to breakeup, but EXPAND the business.
Bob can do maintaing website and sales and service from other city of
his preference and you continue from where you are. Or you also shift,
initial hesitation may not be there after sometime, if you feel
comfortable there.

Well its pretty amazing how you are all one-sided. I appreciate the
comments, but what none of you can understand unless you're here is
how much I work. It's going to be an immense struggle to keep this
thing going. What incentive to I have to work the next 3 years
indebted to him?

pokerdog, 

It's not amazing we are all one sided, you are on one extreme, Bob is
on the other extreme. _We_ are all in the middle, impartial observers,
reading what YOU wrote. You don't want to hear the truth of what is
fair, you want someone to tell you that it's "OK" and "FAIR" to screw
Bob out of what he is legally, morally, and ethically due.

Let's put ALL the cards on the table:

1) What did you offer Bob?
2) What did Bob say he wanted?

If you don't want to tell us, isn't that rather telling?

Hi Cynthia, on top of half the assets:

1. I offered 50G. Last year profit was $180G for the bizz, year before
was 120, year before was under 80. Nothing comes easy though. I'm here
at work still and its 10 PM

2. He didn't give me an exact amount but said 2-3 years profit. It's
understood that that's in the hundreds of thousands probably 200-300
(double and triple the amount thats currently in the business)

Okay, what about offering him a share of profits for the next (? 3, 5)
years, plus your 50G now?  If he were amenable to the offer, this
would avoid your having to borrower, and it would also keep him
interested in the company's well being, which I feel is important (see
above).  Maybe you would need to sweeten the immediate offer to show
your good will.

Yes, a "share" in the profits  - expressed as a percentage -  would be
maybe juicer than you want or expect, but if this occurred, you should
still be happy with the company's positive development.

I thought my 50G was plenty of good will. Where does this theory come
from about 2-3 years past years profit? It is inconcievable that the
leaving partner should get more money than what is currently in the
bank. How do you give more than you have?

pokerdog,
My friend all of us who own our own businesses work very very hard,
very long hours, it is part and parcel of owning a business. We know
you work hard, but so do many many other successful people, if not
all.  If you Google -Business Valuation- you will find a wealth of
information, which is what no doubt "Bob" has done, which is why he is
talking 2 to 3 years worth of profits. Bob wants to split so you
really dont' have a choice, you can only make the best of it.

Think of the people who have commented here as a jury. If you went to
trial this is what we "jurors" would be thinking. We are impartial as
Cynthia has said. You wouldn't win your $50,000 buyout figure in a
jury trial.

What you get for buying out your partner is the exclusive right to all
that future income, and the exclusinve right to control your own
destiny 100%.
You can't change the past my friend, "Bob" is your partner, you didn't
build your successful business on your own, you need to pay him out
farily. If you lowball him, he will probably hire an attorney and then
that will cost both of you even more money, because then you will need
to have your own attorney. The final result will be the attorneys
hiring an Independent Business Valuation and a 50/50 spilt.

I'm sure "Bob" has researched Business Valuation, why would he accept
a low amount for his half of the business? Would you? I know I
wouldn't. I wouldn't gouge my partner, but I would want my fair share.
In my research, limited I admit, no way does $50,000 come close to a
fair split for your (plural) business. You may be able to negotiate
that Bob is paid back over time, but then rightfully he should earn
interest on the delay in his income/payout.

It is nto about "Good Will" check out Google for Business Valuation. I
would provide it but have decided to not comment further, others can
show you if you odn't wish ot look for yourself.

This will be my last comment on this topic. I think perhaps you need
just a bit of time to come to acceptance. Have you ever heard the
phrase, "Rationaization is the greatest human need" Right now I
believe you are rationalizing your "wants". Given time I think you
will be able to move beyond that, into an appropriate position. My
very best wishes for your continued success. I wish you nothing but
the best, the very best.

Pokerdog,
You write that you think 50 grand is good will.  If you had hired  Bob
as a  salaried employee and been the sole owner, that might be the
case, but he is or has been a partner in the company, and a very
intrumental one for its success.  Read again what you wrote about the
quality of his website work and its importance to sales.  As a
partner, he would be due at least half of the profit, wouldn't he?
At least, half of the profit in 2005.
But in addition, when he pulls out, leaving you with a successful
company that he has helped establish, he has a justified right to a
share of the future profit that he has helped make possible.
It now also occurs to me, that he might like my previous suggestion of
taking settlement over a couple of years for tax reasons, spreading
out his income rather that taking a larger amount at once that would
bump up his tax rate.

But now I am also going to sighn off.  You might consider what you
would think would be a just confirmation if it were you who wanted to
get out.

Regards, and I hope you find an equitable settlement.
Myoarin

pokerdog, 

Based on the figures you gave (which went down 20K, btw, from your
original post), and my formula of 50-60 weeks of income being standard
in a service [amusement device] business, you should offer 1/2 of 1
years gross revenue. Not profits, GROSS REVENUE.

Your original post:

..."Our profits were $90000 in 2003, $130,000 in 2004 and $200,000 in 2005..."

A good source of figures is what you claimed to the IRS.

Don't give him anything based on the future. Pay him based on the
income that is KNOWN, that is --in 2005, OR, the last 12 full calendar
months prior to his leaving. The last thing you want is him wanting to
go over your books to see if you are reporting [to him] the actual
amount of cash flow. Plus, there is no guarantee what the future will
bring as you have pointed out.

I agree that what he wants is unreasonable! But I also maintain that
you are too low at your offer of 50K.

What is the actual revenue? Going by your [profit] figures of:

 $90,000 in 2003 
$130,000 in 2004
$200,000 in 2005

What was the total revenue generated in those years?

Hi Cynthia, the figures changed based on our tax return. Actual profit
2005 was $180,000. By revenue, you want total sales? Because we work
in a thin margin industry so it might not be too relevant. Just figure
our profit is about 18-20% of total sales.

Another thing. There are no guarantees in this business. My partner
was out for a couple days this week and those days, sales did suffer.
I simply cannot cope taking on double the work. We had half the sales.
When he leaves, that is half the business walking out the door. This
is why I don't think he's due any part of future earnings. Sure, I can
work 18 hours a day to compensate but I'm not willing to do that. He
simply cannot assume that with him gone, things will be the same
sales-wise. There is no guarantee that his replacement will be as
effective. What is known is this: when he's gone, sales WILL suffer.

Update: Since we cannot agree an an amount, he is looking for a
partner to replace me. This presents a new list of challenges (i.e.
how much draw will he want to take, how many hours, etc.).

If Bob finds a partner to replace himself, what will the arrangement
be? Will the new partner buy out Bob?  That seems like a good idea.
Then, the new partner will have a nut to pay and will be responsible
to Bob for loan payments, not you. Could that be arranged?  If Bob
tries to sell his 1/2 interest, he might soon realize that his
starting figure is too high. Let this play out.

pokerdog,
May I adk you a clarifcation? 
You wrote- Since we cannot agree an an amount, he is looking for a
partner to replace me

My question, is it
A - Bob and a new partner will own the business and you will leave?
B - Bob is finding a new partner for you and you and this new partner
will work together?

Man oh man I sure would be hesitant if it were B. This new partner can
learn trade secrets, walk away, all kinds of bad vibes comming out of
you taking on a total stranger as a business partner. Pokerdog please
be careful.

Honestly I really wish you would just hire a business valuation expert
and pay Bob off, and later, if you feel you want a partner you find
your own.

The issue between you and Bob is "what is a fair amount" get the
monkey off your back, I urge you to go to a professional. When you
have a tooth ache you go to the dentist, a professional. Here is what
you could do. Hire, out of your own personal checkign account, a
Business Valuation Expert and don't even tell Bob. I don't even think
it would cost you that much to get a Business Valuation becasue of no
inventory, limited assets etc. Just do this for yourself for your own
knowledge and benefit.

It seems likethe more you delay coming to agreeable seperation terms
it only gets worse for you. We all wish you the best. Plese post back
here and let us know what is happening. I wasn't going to post again,
but then with this latest development I wanted to get clarification.
Good Luck to you, sincerely.

Actually, I think the idea of Bob finding a new partner is fairly
workable. Pokerdfog will have an opportunity to sign a formal
partnership agreement this time (HINT!), and can add clauses for
no-compete, etc...  Also, it means pokerdog and Bob can remain
friends, because they don't have to agree on an amount, and pokerdog
won't have to pay Bob...

cynthia,
I really really respect your opinion. Your comments are always well
thought out and reasoned. However I would venture to say that you have
never had a business partner. It is not easy being business partners,
not easy at all. it is alost like a marriage. I like to think of it as
a "Work Marriage."  Would you let someone pick out your spouce for you
and you ahve no choice but to be married to that person?

The grief and angst trying to enforce a business parnership agreement
when you are not getting along with your business partner is
exhausting, simply exhausting. And the new partner is not coming in at
a level playing field. Bob & Pokerdog started at the same level, with
an idea and they built it together. Rightfully pokerdog is going to
always feel that it is "his" business and I wouldn't fault him for
emotinally not treating a new partner, that Bob has selected for him,
as an equal. S/he can never be an equal since pokerdog knows the
mistakes that they made and recovered from, what they tried before
etc. New Partner will have never sacraficed to the same extent that
pokerdog did. thus they will never be equal partners and the word
partnership is an oxymoron in this circumstance.

If pokerdog found a new partner, that might work but I really doubt
it, unless it was his wife. I jsut can't see psychologically how
pokerdog can give up half his profit to a newcomer and feel good about
the situation.

Better plan is for pokerdog to just plain buy out Bob and go off on
his own. OR second best, pokerdog finds a new partner. My husband was
in a multi million dollar 13 year partnership. Believe me partnerships
can be tough. Pokerdog has not been real specific on why Bob wants
out, and actually it is none of our business really. But if his best
friend wants out of a really successful business, and look at their
profits these guys are going gang busters, that to me shows how
difficult it is to operate a true partnership in this small company.
Pokerdog does not need a new partner to bring in capital to grow the
business, the business is growing great.  Pokerdog can hire help less
expensively than bringing in a new partner and sharing 50% of the
profit. This business is pokerdogs baby. Cynthia think for a bit about
what I wrote and write back.

roxrox,

You said:  ..."However I would venture to say that you have
never had a business partner..."


LOL!!!!  You are so right. My father was self employed rom the time of
my birth, I had a very non-traditional upbringing in that way. I was
never told to grow up and get a job. I listened to stories about
profit and loss, customer service --instead of hearing about starving
children elsewhere...

One of my father's wisdoms was to never, ever enter a partnership. I
have never had a partner, and I have owned two successful service
businesses that comprised 17 years of my adult life.

I should have remembered that, a new partner is not only a horrible
idea, this situation should be viewed as an opportunity to gain full
control of the company, at whatever cost.  It's certainly the thing
that kept my brother going for those few stressful months. Now, he has
all the income. He has delegated much of the [old partner's] work to
me, but I am an employee, just like I advised him.

POKERDOG - I was out of my mind...... NO PARTNERS!!!

Thanks for waking me up.

Wow my head is spinning. I won't be able to write a full response
until tomorrow, but wanted you guys (Cynthia and roxrox) to know I
read your thought out responses. Oh well, here I go... business broker
came in today. This was a guy brought in by Bob. And wouldn't you know
it.. we both came away with two totally different interpretations. I
actually thought Bob was going to come and accept my offer, either
that or think that I got to this guy b4 hand and pay him off; i felt
that confident about what he said.

a) he said to find someone as a direct replacement for Bob, a working
partner is close to impossible. Who's going to pay any amount of money
to work full-time if they already have a comfortable job. Plus, I'm
going to want the guy to work at least 10 hours a day and half similar
financial needs as me (don't want the guy taking out too much draw,
same as me)

b) there could be a financial backer. An investor that would be hands
off but he would pump money into the business for marketing, new
staff, etc. But he'd probably want to have a higher stake in the bizz
than I, so thats a total no-go.

c) which leaves an investor who would be willing to be 50/50 with me,
but hire someone in his place. This way I wouldn't have that chip on
my shoulder that I was working harder than the partner, cuz the new
guy is just an employee.

So the business broker said like this: If I'm an investor looking to
make money, how much would I pay for this business which did $180,000
in profit last year. Well the $180,000 really is not all profit. Let's
say Bob and Pokerdog are salaried workers. Lets say their job is worth
$50K each. So that leaves $80K, then there's a bookkeeper 10K a year,
webmaster 25K a year, which leaves about $45 or $50K a year minus
other expenses of a growing business (accounting fees [my dad does
taxes for free], more advertising, more office space), CUT IN HALF CUZ
HE'S BUYING HALF THE BIZZ, so that's his real profit and that is the
multiple he'd be willing to work off of in coming up with a number for
the business.

So,,,, back to me... this worked directly into what I thought and I
was thrilled he said that and it validated my $50G (on top of half the
bank) that I offered. But somehow, Bob got another impression. Perhaps
because I asked the guy for a ballpark figure of how much he thinks he
could get for the WHOLE business. He said "best case" 400G, but he
gave a caveat that of course there are lots of expenses and salaries
to pay so that is probably not the true value of the business. He
reiterated that the business without Bob and I is worth nothing. But
Bob took that 400G and said see thats why i'm asking for 200G.

I learned something valuable from this business broker and I'm glad he
came. What Bob and I view as profit (90G each) is an investors
"expense" or at least some of it is because if we weren't owners, this
would be salary. Us two are actually in the trenches every day, it's
not like we're buying and selling stock. For instance, if I earned 90G
take home from the business last year, well I feel for my time alone ,
the massive hours I put in are worth at least 60G if I were a salaried
worker so thats not really money on an investment, it's whats on top
of that.

So I guess I did give the whole scoop instead of tomorrow like I was
planning. Hey, both of you, I really appreciate the time you're
putting into this and you totally shouldn't feel beholden, I guess I
am being kinda cheap by not giving the go-ahead for an entire answer
but maybe this thing is bigger than just one answer. Anyway, thanks
for your time and happy Easter or Passover or April holiday:-)

one more thing, if I was an investor, I would also have to take into
account the tenuousness of being beholden to the search engines and
not having physical assets and that the 2003 and 2004 profits were
nowhere near. Of course to be fair, first quarter 06 is up
significantly from first quarter 05.

Pokerdog,
Yippie! Finally you and Bob are briging in some outside experts and
not attorneys at this point. Good for you guys. My thought on the
Business Broker is that his iterest is in makeing a sale and
commission. It is always in a Brokers best iterest to tell you that
your business is not worth that much. If he can get you to agree that
the busiess is not worth that much he can get a low selling price and
make a quick sale.

I really urge you to go one step further and Google Business Valuation
and call up some consultants and interview them specifically looking
for experience in the valuation of Internet based companies. You
learned something form the business broker but you will learn a LOT
more from a Business Valuation expert. Take the plunge! Bob is still
hearing $400,000. Also please ask the Business Broker to send you a
written appraisel of your business. It is good to talk, but get it in
writing.

A business valuation expert, and hopefully you will look for someone
with a CPA, is going to be worth the money. I suspect it could cost
around a grand to $1,500 (just off the top of my head but I hired and
worked with a lot of consultants over the years, so my gut has some
experience). Now that you have broken the ice with bringing in an
outsider continue, don't stop with one Business Broker. You and Bob
should be on a Speaker phone and together interview Business Valuation
Experts. It might be hard but suck it up and do it together. Do the
phone interviews select your candidate and follow through.

Look you didn't get this far in your successful career by sitting on
your hands and wishing. You rolled up your sleeves, worked tremendous
hours, and you overcame obsticles. This is jsut one more obsticle
actually try to look at it as an opportunity. You now have the cahnce
to control completely this business. Stay friends with Bob, even keep
him on retainer for xx% of the profits to consult. Bring in the next
expert and do it together. Jsut as you built the business together
really try HARD to break it of between you together.

When my husband split with his partner, and they were partners for 10+
years they worked it out between them, and yeah things were not going
100% smooth they never are if one side decides to break off, and then
after they reached their agreement they went to one lawyer, their
business lawyer, and told them what they had agreed to and to write it
up. Even though it was psychologically hard to do, both my husband and
his former partner managed to suck it up and work it out between the
two of them. Both of you know this business inside and out, neither
one of you can pull the wool of the others eyes.

Your one open item is how much is the business worth, so keep going
pokerdog jsut keep going. Keep going to souces until you feel
comfortable that you knwo the answer. You can't let this rest on one
Busines Brokers opinion. At least get another opinion. Think of it as
your business is sick and you ahve to go to the doctor. When you are
really sick pokerdog you do end up going to the doctor no matter what
the cost, becasue you need to get better. Your business has an
illness, a partnership virus, please go to the Business Valuation
Doctor.  Interview the doctors together and pick the one you both feel
comfortable with.

BTW-God Bless your dad for doing your taxes for free. You have a good
support system surrounding you. I hope you dont' close out this
question because then we won't get to help (I hope we are doing that)
or follow along in your saga. I am so proud of you for startig with
nothing, and using the Internet techology that didn't even exist not
so long ago to build a successful business you should feel very proud.
After Bob is gone I hope you find a nice wife, or partner if the case
may be.

Hey pokerdog can I get a deal on a POS for my brother in laws
restaurant? Just needs one register and a kitchen printer. I feel so
sorry for his wife. She has such a long walk form the dining room down
a very long corridor to the kitchen. It would be great if she could
enter her orders form the dining room. Hey no harm in asking :)

So ... What eventually happened to this business ? What agreement did you come to ?