how should assets including intellectual property be distributed if 1 out of 3 partners wants to continue?

Question

Due to unethical business practices 2 of 3 partners would like to dissolve the company - the third partner (responsible for the acts) wishes to continue - how should the valuation of assets be distributed - if based on market value the assets would sell for peanuts - plus intangible assets like clients, company market reputation would also be benefiting him

Answer 1

Consider this as an alternative: The two of you buy the third out at a mutually agreed upon price. This avoids the problem you described above and probably brings more value to the third partner than a distribution of assets.

As you know partnerships dissolve whenever a partner leaves the business. So your leverage is that the two of you will leave and take the customer lists, etc. with you and go into competition with him. You'll have to duke it out for awhile but eventually the two of you will win.

Your comment that your partner was engaged in unethical business practices is interesting in light of your listing "company market reputation" as a valuable asset. Usually, unethical practices have a huge effect on the reputation of the company.

Answer 2

Based on your description of the assets of the company, I gather that they aren't worth going to court to fight over. Lawyers are expensive. You'll likely never get to litigate anyway because the lawyers will arbitrate a settlement. In the case of clients etc. this is termed "goodwill". Determining the value of goodwill in any company is difficult. However there are some guidelines used in the accounting industry. Instead of hiring a lawyer, I'd get an accountant to do a business valuation (including the goodwill) and either make the guy an offer to buy his share, or perhaps finance your shares to him. In either case, unless this is a very, very valuable operation I'd just walk away before going through a lot of trouble and court costs.

Answer 3

I'm guessing the partnership agreement does not address winding up due to unethical behavior? Sounds like you might be in for a lawsuit regardless. If the acts are illegal you may be able to cut the bad actor out completely. In any case if the business asets are valuable and salvagable, I'd talk to an attorney.

Answer 4

both. i elect to study & i attempt to seem solid. ??? yet i do not decide others by way of their looks, because no man or woman might want to so i'm into human beings's personalities, not looks. i'd truly see a grimy, matted man or woman with a good personality than a sparkling, chic man or woman with a nasty personality.