Your business partner wants out. Now what?

A co-founder who wants to stop affects everything at once: the work, the money and often a friendship too. With a clear order of steps you keep control, and your company can come out of it stronger.

The route in six steps

1. 01Talk
2. 02Agreements
3. 03Legal form
4. 04Value
5. 05Handover
6. 06Ahead

1. Talk first, numbers later

Start with the why. Does your partner want to leave completely, or just do less? Is it about money, time or a different plan? Sometimes a new division of roles is enough.

If the decision is final, agree together how and when you tell others. That way customers and staff do not hear it second-hand.

2. Get out your agreements

Check what is on paper. In the Netherlands that is the partnership agreement for a vof (general partnership), or the articles of association and any shareholders' agreement for a bv (private limited company). Look out for:

• Continuation. May the others continue the company, and on what terms?
• Offering shares. Many articles of association say shares must first be offered to the other shareholders.
• Price. Does it say how the value of the stake is determined?
• Leaver rules. Arrangements for leaving on good or bad terms, known as good leaver and bad leaver.
• Customers and competition. May your partner do the same work later, or approach your customers?

Little or nothing on paper? Then make those agreements now, together, and put them in writing.

3. Your legal form sets the route

A vof and a bv work very differently when someone leaves:

Vof or bv: what happens

Vof

• In principle the partnership ends when a partner leaves.
• Unless the agreement says the others may continue.
• The leaving partner is removed from the KVK register.
• As a rule, that person stays liable for old debts.

Bv

• The company itself continues.
• Only the shares change hands, via a notarial deed.
• Is your partner also a director? That is arranged separately.
• The KVK registration is updated.

4. Work out what the stake is worth

This is often the hardest part. If you cannot agree, let an independent party set the value, such as a certified valuator or an accountant you both trust.

If there is not enough money to buy your partner out at once, the price can be paid in instalments. A buyout can also have tax consequences for both of you. Ask a tax adviser or your accountant to take a look.

5. Arrange the handover

Make a list of everything in your partner's name, or that only they have access to:

• Authority at the bank and the KVK
• Domain names, email, social media and passwords
• Contracts with customers, suppliers and the landlord
• Knowledge that lives in one head only: processes, contacts and agreements

Plan a handover period, so customers notice as little of the change as possible.

6. Look ahead

A departure is also a moment to look at your company with fresh eyes. Which tasks are now yours? What does not work alone? Sometimes the best next step is a new partner who brings in not only money, but knowledge and execution too.

Still together? Agree today on what happens if one of you stops. Agreements are easiest to make while everyone is still on good terms.

This article is general information, not legal advice. When a partner leaves, get help from a notary, lawyer or tax adviser.