A friend and I have been looking to build up a private label business and we formed an 2-member member-managed LLC about 2 months ago. I’ve realized that it’s not going to work out with him as a business partner, and I want to exit the LLC and move forward on my own.
"Not looking for legal advice" but I would appreciate your thoughts on how you might go about this if you were in this situation. I've never been in business outside of some freelance shit in the past, so this is an unfamiliar world. Here are the details:
He purchased the LLC from legalzoom, and they filed the articles of incorporation with the state. 50-50 capital interest for each of us which is what we agreed on verbally.
Nothing has been signed in terms of the LLC paperwork. My name is on the articles of incorporation that were filed. There is an unsigned operating agreement too with my name on it. There is no non-compete clause in the operating agreement.
The only thing tying me on record to the business is the start-up costs, emails, google drive documents, and project management software. All in all start-up costs are probably $550 on my end $350 on his end. But all we’ve done is make a logo, register a domain, and get quotes from suppliers.
We have not placed any orders from suppliers yet, though we were right on the verge of placing the order. It’s all been research, planning, and discussions with suppliers. To his credit, he has done 99% of the work on getting quotes from suppliers.
While I should have seen this coming, some recent events have made realized that being partners with this guy was definitely a bad idea. In short, he is extremely irresponsible and cannot be relied on. Having him as a partner will be a liability, not an asset.
There's several things have happened, but a couple weeks ago he blocked my phone and Facebook and was completely out of contact for 6 days. Because he disagreed with something I said. He didn’t even give a hint he had a problem at the time. He just left the meeting with no indication he was pissed off, and disappeared for 6 days. He apologized profusely afterwards, but I obviously cannot trust him. If he can do that, he's capable of anything.
My goal is to exit the LLC, and launch a similar business/product on my own with a different brand name, logo, etc. There is a list of supplier contacts he has built up, and quotes that I may use. He can continue the LLC if he wants with the existing brand/domain, etc, I don't care. Or he can choose to dissolve it. I don't even care about recouping start-up costs, I just want a clean exit so I can move forward.
My question is, if you were in this position, how would you proceed exiting the partnership, to prevent any issues down the road. If he wants to continue, do I simply need to get in writing that I am transferring my 50% interest in the LLC to him? Do we need to amend the articles of incorporation with the state to get my name taken off? I don’t care that I’ve invested more in start-up costs. I just want to move forward and not look back.
The worse case scenario I envisioned, is I build up a business along the lines of what we were trying to do, with manufacturers he made contact with, and he comes after me later. I know this is a longshot, but he is unpredictable and does have lawyers in his family, and desperate people do desperate things. He is 26 just failed out of college a second time and assured me this business is all-or-nothing for him.
You're probably wondering why I got into business with someone like this. My original thinking was that he was serious about his motivation to make this work, and would put in the hours/sweat equity, and I could be more strategic, considering I already have a stressful job that consumes a lot of time and energy. And he did have some cash from an inheritance for the initial capital contribution to be 50-50. I've wanted to launch something for a long time, always struggled due with time and energy sucked up by day-job, and it seemed like this a way to make it happen.
This actually did go well for the first several weeks as he was able to make a way more progress than I was reaching out to suppliers. When I tried to reach out to suppliers, it went nowhere because it was a constant game of phone tag. They would call me back but I would be on a conference calls for work and couldn't take it, then I call them back and it goes to VM. He was able to follow up more effectively and n ow we have a large sheet of price quotes and product information, that did take a good amount of time and effort on his end to build. But in the last couple weeks, he hasn't been putting as much active effort in. My concern is I'm going to have to direct and spoon-feed him every step of the way. He will end up being more of a employee that I have to constantly give direction to and babysit, than a co-owner of the business who is driving things forward. At least that's how it's looking at this point.
"Not looking for legal advice" but I would appreciate your thoughts on how you might go about this if you were in this situation. I've never been in business outside of some freelance shit in the past, so this is an unfamiliar world. Here are the details:
He purchased the LLC from legalzoom, and they filed the articles of incorporation with the state. 50-50 capital interest for each of us which is what we agreed on verbally.
Nothing has been signed in terms of the LLC paperwork. My name is on the articles of incorporation that were filed. There is an unsigned operating agreement too with my name on it. There is no non-compete clause in the operating agreement.
The only thing tying me on record to the business is the start-up costs, emails, google drive documents, and project management software. All in all start-up costs are probably $550 on my end $350 on his end. But all we’ve done is make a logo, register a domain, and get quotes from suppliers.
We have not placed any orders from suppliers yet, though we were right on the verge of placing the order. It’s all been research, planning, and discussions with suppliers. To his credit, he has done 99% of the work on getting quotes from suppliers.
While I should have seen this coming, some recent events have made realized that being partners with this guy was definitely a bad idea. In short, he is extremely irresponsible and cannot be relied on. Having him as a partner will be a liability, not an asset.
There's several things have happened, but a couple weeks ago he blocked my phone and Facebook and was completely out of contact for 6 days. Because he disagreed with something I said. He didn’t even give a hint he had a problem at the time. He just left the meeting with no indication he was pissed off, and disappeared for 6 days. He apologized profusely afterwards, but I obviously cannot trust him. If he can do that, he's capable of anything.
My goal is to exit the LLC, and launch a similar business/product on my own with a different brand name, logo, etc. There is a list of supplier contacts he has built up, and quotes that I may use. He can continue the LLC if he wants with the existing brand/domain, etc, I don't care. Or he can choose to dissolve it. I don't even care about recouping start-up costs, I just want a clean exit so I can move forward.
My question is, if you were in this position, how would you proceed exiting the partnership, to prevent any issues down the road. If he wants to continue, do I simply need to get in writing that I am transferring my 50% interest in the LLC to him? Do we need to amend the articles of incorporation with the state to get my name taken off? I don’t care that I’ve invested more in start-up costs. I just want to move forward and not look back.
The worse case scenario I envisioned, is I build up a business along the lines of what we were trying to do, with manufacturers he made contact with, and he comes after me later. I know this is a longshot, but he is unpredictable and does have lawyers in his family, and desperate people do desperate things. He is 26 just failed out of college a second time and assured me this business is all-or-nothing for him.
You're probably wondering why I got into business with someone like this. My original thinking was that he was serious about his motivation to make this work, and would put in the hours/sweat equity, and I could be more strategic, considering I already have a stressful job that consumes a lot of time and energy. And he did have some cash from an inheritance for the initial capital contribution to be 50-50. I've wanted to launch something for a long time, always struggled due with time and energy sucked up by day-job, and it seemed like this a way to make it happen.
This actually did go well for the first several weeks as he was able to make a way more progress than I was reaching out to suppliers. When I tried to reach out to suppliers, it went nowhere because it was a constant game of phone tag. They would call me back but I would be on a conference calls for work and couldn't take it, then I call them back and it goes to VM. He was able to follow up more effectively and n ow we have a large sheet of price quotes and product information, that did take a good amount of time and effort on his end to build. But in the last couple weeks, he hasn't been putting as much active effort in. My concern is I'm going to have to direct and spoon-feed him every step of the way. He will end up being more of a employee that I have to constantly give direction to and babysit, than a co-owner of the business who is driving things forward. At least that's how it's looking at this point.
