What to do if a partner leaves?

Starting a business is not easy. What should you do if a partner wants to quit midway? Many people said, it’s impossible, they are all good brothers, how could they leave!

Let’s talk about a very cruel fact. When a company grows from small to large, it is a high probability for a partner to leave. I looked through the team lists of listed companies in several countries and found that almost all companies have experienced partners leaving. Things happen sooner or later.

So don’t hide your illness and avoid medical treatment. You should face this matter correctly.

The recent divorce of Wang Baoqiang in the entertainment industry and the resignation of Feng Dahui in the technology circle have been all over the circle of friends. I don’t understand the first things, but I pay more attention to the latter ones. According to the public account article posted by Gao Shaoxing, it is Fenng worked as CTO at Dingxiangyuan for six years. The company’s executives also joined the board of directors and recently resigned. Some joint-stock companies wanted to buy back, but the price could not be negotiated. In addition, some communication and misunderstandings led to various conflicts. Because the article was deleted and I am not sure of the specific details, I just abstracted an issue, which is that partners quit and then fall out from time to time, and it may have a very big impact on all parties and the company, ranging from damage to the brand. , or the business will collapse.

Prepare in advance: Partnership Agreement

What should I do if a partner withdraws?

This score should be discussed in advance and solved afterwards

Since the withdrawal of a partner is a high probability event, everyone should clearly write down the agreement before forming a partnership.

The standard terms of a partnership agreement are listed below (main reference: Lawyer Zheng Minglong’s article "Quick Tips: How to Sign a Partnership Agreement for a Entrepreneurial Team?")

1. Cooperation Background

The partnership background is easily overlooked, but it is precisely the most basic part. Elaborating on the background of cooperation is an integrated analysis of the resources on which the partners cooperate, and a process of sorting out the respective roles and contributions of the partners to the project.

2. Overview of Entrepreneurship Project

Entrepreneurship project is the carrier of partnership. Before starting work, it is necessary to understand what is to be done and how it will be done, including project type, operation Scope, field, positioning, operating model, project promotion plan, development vision, etc.

3. Investment

Investment method. The investment methods specified by law include capital, real estate such as land and factories, various movable properties such as cars, and intellectual property rights such as patents, trademarks, and copyrights. In entrepreneurial practice, some people invest in technology, specific labor services or specific resources. In entrepreneurial practice, clauses must be used for technical processing and legalization.

Capital contribution period. The investment period includes the arrival of funds and the transfer of movable and real estate rights. Among entrepreneurial teams, a common transfer is the transfer of intellectual property rights. The method of capital contribution and the period of arrival must be clearly agreed upon to ensure that the partners’ cooperation resources are in place simultaneously and to ensure the smooth progress of the entrepreneurial project.

4. Equity ratio

When making the equity structure, the equity incentive pool, future financing and equity holdings of new partners must be taken into consideration. Therefore, in the equity ratio clauses, no conventional agreement can be made, and special clarification should be made where there is agency holding.

5. Division of labor

At the moment when partners decide to start a business together, they should all have a clear understanding and definition of their division of labor. Crowdfunding platform for cultural and creative fields) But it still needs to be fixed in writing. Who is the CEO, CTO, and COO must be determined. The importance of a clear division of labor is also directly related to the responsibilities of partners in the project.

6. Profit and loss responsibility

This is a very important clause, and its significance is self-evident. Profit and loss still need to be explained clearly, including how to share profits and how to bear losses. The principles, rules and processes should be based on villains before gentlemen.

7. Salary

For partners who need to receive salary, specific agreements must be made.

8. Finance

The finances of entrepreneurial teams are generally very unstandardized. There are no full-time or *** accountants, but fund custody, expenditures, accounting and supervision must still be standardized. .

9. Decision-making and voting

There is no doubt that partners enjoy statutory shareholder rights in accordance with the law. However, the uncertainty of entrepreneurship determines that its decision-making and voting rights must be different, and disagreement voting rules must be introduced. An entrepreneurial team needs a core, and the CEO should be given important or even one-vote approval and veto rights when it comes to voting on entrepreneurial projects and major team matters.

10. Equity maturity

Set up relevant equity maturity mechanisms.

11. Equity dilution

When a startup project is financing, shares must be diluted. Generally speaking, the founder’s equity is diluted equally according to the equity ratio, but there are also cases where equity is not diluted equally. There are also special circumstances where shares are held on behalf of others. Therefore, specific arrangements should be made for equity dilution based on different circumstances.

12. Protection of entrepreneurial projects

In general partnership agreements, it is easy to overlook the protection of entrepreneurial projects.

During the entrepreneurial process of the entrepreneurial team, it is easy for the partners to fall apart due to various differences. Some partners quit, taking away the technology, knowledge, experience and models accumulated in the entrepreneurial process, and starting a new business.

In order to prevent this situation, I generally require entrepreneurial teams to include confidentiality, non-compete restrictions, industry prohibition, full dedication and business model protection clauses in the partnership agreement. Business model protection clauses are relatively rare. In the United States, business models are protected by law, but the business model is not included. However, just because the law is not included in the scope of protection does not mean that it cannot be agreed upon. That is to say, the business model of the entrepreneurial project is clearly agreed upon. Anyone who starts a new business or leaks secrets will be liable for breach of contract or compensation.

13 Equity transfer, withdrawal from partnership and absorption of partners

In order to ensure the stability of entrepreneurial projects, partners are generally prohibited from transferring shares to external parties.

In the process of starting a business, it is normal for some partners to withdraw due to various reasons, and to introduce new partners due to project needs. However, rules must be followed for the withdrawal and entry of partners, otherwise, The impact on the project is very large, even fatal. Here, detailed agreements must be made on the permitted reasons for withdrawing from the partnership, the withdrawal process, the conditions for joining the partnership, voting and procedures.

14 Liquidation

Liquidation terms are also very important. Although entrepreneurial projects want to be successful, they must also consider possible failures, such as the liquidation of partnerships and properties after entrepreneurial failure. It is particularly important to agree on processes and rules, especially for the liquidation of intellectual property achievements obtained during the entrepreneurial process.

Post-event solution: share repurchase/equity implementation

If the above is not clearly listed in advance, then this will take some thought

First of all, if the company It's not too big yet. If the departing partners don't care much about the equity, it would be best to leave it to the brothers who are still struggling. The brothers who are still here say thank you.

If the company has developed to a certain scale and the equity has become relatively valuable, you may need to sit down and discuss this. Generally speaking, there are two solutions. The company or other shareholders can repurchase the shares at the same price. Shares, another solution is the implementation of equity (how to implement equity to individuals).

The conflict between Fenng and Dingxiangyuan is mainly due to the disagreement between restricted stock buyback and reference valuation.

Zhihu Nanye also wrote an article "Gossip about restricted stocks" Buyback: Why it is unreliable to buy back based on the last round of valuations》

Why do companies generally not buy back based on the last round of valuations? In fact, the reason is very simple. Before the company has an IPO or merger and acquisition , all valuations are not widely recognized by the market, let me give you an example:

Little A obtained the right to exercise qualifications in 2012, and received the company’s restricted rights based on the company’s valuation of US$10 million at that time. Stocks. In 2014, the company’s Series C valuation reached US$400 million. In 2016, the industry was in recession and the company encountered huge difficulties. Xiao A was not happy and wanted to leave. At this time, the company also wanted to raise funds externally, but the valuation had already It fell to US$100 million. Let’s imagine, when Little A leaves his job, will the company repurchase his shares at a valuation of US$400 million? This is obviously impossible.

This is a systemic problem. If we only agree to this repurchase condition if we only see that the company's current valuation is equivalent to three times the previous round's increase, then the company's valuation will fall in the future, and the company's shareholders and employees who hold shares will only suffer losses. bigger. When many of us look at the problem, we only see our own interests and fail to see the difficulty and inoperability of the company in coordinating this matter.

Let’s talk about options and restricted stocks of listed companies. After the stock market crash last year, many listed companies launched employee incentive plans and option plans. However, when they were officially granted, the stock price was lower than the option price set at that time, causing many companies' incentive plans to directly abort. Employees are not stupid and will not participate in the incentive plan at a higher price than the market price, so why does the company need to buy back at the last round of valuation? Repurchases of restricted stocks of listed companies during the restriction period are all repurchased at the original price and directly canceled. It has never been heard of repurchasing employee stocks based on the market value of a listed company at a certain time. This is unreasonable and cannot be operated.

Therefore, when discussing employee equity repurchases, it is unreasonable and impossible to use the previous round of valuations. If you have to give me any suggestions, my suggestion is that when the salary is good enough, + When talking about restricted stocks based on the performance bonus mechanism, basically don’t consider options. At present, the exercise costs, exercise cycles, restrictions and taxes are meaningless to an ordinary person. If you pay a salary + bonus that is significantly lower than the industry standard, it is meaningless just for options.

Some things not to be done when a partner leaves

When a partner leaves, there are certain things that both parties should try not to do.

Don’t make things public that haven’t been discussed yet

Don’t complain or complain in public

Don’t dwell on small interests

Don’t Go over old scores

Don’t talk about some confidential company strategic information

In line with the principle of “get together and part ways easily”, the above is not helpful in handling matters, and may Intensify the conflict and bring adverse public opinion impact on the company and both parties themselves.

Moreover, at some critical time points, everyone is in a very sensitive state, and many unintentional actions may be misinterpreted or misunderstood, so it is best to make as few actions as possible.

Summary

Brothers who settle accounts clearly are true brothers

The original intention of starting a business partnership is definitely to have like-mindedness and mutual recognition, but attitudes cannot be avoided on the road to entrepreneurship. Entrepreneurs also need to look at situations of disagreement or partner departure rationally, make preparations beforehand, and think about plans after the event. If you lose a partner, you can still recruit another one. If everyone has conflicting interests, each other will Hurt, or even openly fight, then the gain outweighs the loss.

Read (63) What should I do if my partner suddenly leaves?

This has nothing to do with what you are studying. There are three problems in handling this matter.

First, how do you calculate the profit you mentioned? Does it count as your 4W return on capital? It has already been paid back. Yes, give him 2W, which is regarded as buying his shares, and give him half of the profit, which is divided into profit dividends. It depends on what you agreed at the time. You have already mentioned the share. What will happen if the partner's son does not obey discipline in the company? If the partnership is divided If a man's son is fired, his partner will also leave

You can inform your partner first, and if it happens again next time, you must act in accordance with the rules. After all, blind indulgence in this matter will be harmful to your company. It is not good for his development and his son’s future. If he insists on threatening to leave in order to protect his son, then just leave. Partnering with such an unprincipled person is simply a bedfellow. To put it harshly, he simply wants to take advantage of him. It's cheaper for you. If a partner runs a one-person company, how to ensure the rights of the partners?

Develop a corresponding system.

①Partnership property does not belong to individual partners, but to all partners. Therefore, the handling of partnership affairs should be decided unanimously by the partners. During the existence of the partnership, the partners have no right to dispose of their share of the partnership property. However, a partner's rights in a partnership may be transferred to another person with the consent of the other partners. ②Partnership debts are first repaid with partnership assets. When the partnership assets are insufficient to pay off the debt, the shortfall will be paid off with the partners' other properties. When the debt is paid off with the partners' other properties, each partner will share in proportion to their share of the capital contribution.

③For partnership debts, partners are jointly and severally liable. ④Partners may withdraw from the partnership for legitimate reasons. If other partners believe that immediate withdrawal is detrimental to the partnership, they may also request the partner who proposes to withdraw to postpone his withdrawal. Otherwise, the withdrawing partner will be liable for the resulting losses.

The "General Principles of the People's Republic of China and Civil Law" mainly stipulates about individual partnerships: the partnership contract shall be a written agreement; the debts of the partners to the partnership shall be settled in accordance with the proportion of capital contribution or the agreement in the agreement. The property shall be liable for repayment and shall be jointly and severally liable, unless otherwise provided by law. A partner who repays partnership debts in excess of his share shall have the right to seek repayment from other partners.

How to let the partner leave if he is not suitable?

Together with other shareholders, we can liquidate the company.

It can be stated clearly.

Just give all the stock money to others. What should I do if a partner of a partnership disappears?

If a shareholder decides to continue investing in the company, he or she can convene a shareholders' meeting and pass a resolution on whether to continue investing in accordance with the voting method stipulated in the company's articles of association. If a partner disappears and the shareholders' meeting cannot be held, If the company fails to form a valid shareholder meeting resolution, it can go to the People's Court to apply for declaration of disappearance, and then the trustee will perform the trusteeship duties. If the company cannot operate normally, other shareholders may also dissolve the company in accordance with the procedures stipulated in the company's articles of association and the Company Law.

According to Chinese law, if a citizen’s whereabouts have been unknown for two years, interested parties may apply to the People’s Court to be declared missing. After the court declares the missing person missing, the property of the missing person shall be managed by his spouse, parents, adult children or other close relatives and friends. If there is no above-mentioned candidate or there is a dispute, the court will appoint the trustee. The custodian is responsible for managing the missing person's property. If the custodian fails to perform the custodial duties or infringes upon the missing person's property, the interested party of the missing person may request the court that the custodian bear civil liability, or apply to change the custodian. . Can the partners be trusted?

I just became a partner. I may be a novice. I only earn about 200 a day. I hope there will be greater development in the future. What will happen if the partnership business is separated?

The partnership business is separated. Now, let’s calculate all the accounts clearly. Two people share the shares, dividends or debts according to the agreement. What should I do if the partner is selfish?

Hello, it’s nothing. This is normal. Everyone has certain expectations. Those who are selfish, take a long time to grasp it. How to treat the departure of a partner when starting a business

When a partner leaves when starting a business, this kind of person does not have the perseverance to persist. If you leave early, you can better understand this person. However, I personally think that since it is starting a business, it must be done well. Be prepared for all difficulties.