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What do you do when you are in a 50-50 situation and your partner is clearly and unambiguously not pulling his weight?

You can’t fire him but you believe in the business.

You got into a 50-50 situation because you are a first-time entrepreneur and over-estimated his capability for expediency because you needed a partner and he seemed to check all the right boxes.  Only it turns out you’re doing all the work and his work is producing minimal results.  If you could use that equity to hire (or acquire) new talent, it would significantly enhance the business.

But it is 50-50 so you need the other person’s consent.  And he has no desire to want to sell out.

Thoughts?

  • 50-50 situations are normally pretty ugly.

    I learned that the hard way.

    Advise to future entrepreneurs: better to write up a contract that says:

    50% stake should based on specific completed milestones (per founder, individually) (Or just use vesting).

    People get lazy once they know how much they are getting.

    As for the OP.

    Seems you have your heart in the right place. Just be completely honest with your founder/employee. Tell him that (no matter his reason) this is still a business. And it can’t be successful in the current performance that he is showing. Tell him that you would like to see some actual results. And if he can’t or doesn’t want to do that, please speak now. Or forever hold your silence. (aka, fire him / start a new business with a different name)

    Reply

  • If you can’t untangle this situation, leave the business, sit out the non-compete term (if there is one) and start again.

    If you feel that you are doing the work and he is not contributing, then you should be able to start again while his business withers and dies.

    It’s a difficult decision to make, but better in the long term.

    Reply

  • Help your co-founder understand that 50% of nothing is nothing. If he doesn’t get in gear or get out the company will fail – either because you’ll leave or you won’t be able to hire the right people. He’s far better off in that situation parting with a significant chunk of equity to make money on what he retains. Of course now you’ve got to figure out how much he should part with…

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    • It’s also conceivable that if you explain that you don’t think things are going to work out with a 50-50 split and ask him to take a cut, he or she may think it’s a reasonable thing to ask. Especially if it’s early on, without a ton of money involved, they may be understanding and be willing to renegotiate the setup.

      Reply

  • Ask them what the business is worth today. Then tell them what it is worth with proper documents and a valuation to back it up. Then cut them a check and say it was nice knowing you, but I have a company to build.

    Reply

  • Leave him and the business, start a new one. You have nothing to fear if as you say, he does nothing. With you gone, he’ll probably have to close shop. Get at least 1 legal consultation to figure out if its best to push for dissolving company now, ask him to buy you out or just leaving with your 50% until you hear otherwise, etc.

    Reply

  • Tell him you want to buy his shares. Ask him the price he thinks reasonable. When he says a price, tell him that at this value, you changed your mind and now you want to sell him all your shares. Your goal is to find an agreement, either you buy or you sell, but you definitely get rid of this. If you can’t, stop working on this business and let it fail.

    Reply

  • That’s exactly my situation right now.

    50/50 LLC. Going to offer him to buy out his share. Definitely consult to lawyer before taking any steps.

    Reply

  • This is an ice cream truck and he came up with the money to buy the truck. He owed me close to $1,000 leaving me owing $1,500.00 to him. However he won’t sell and won’t leave. :/

    Reply

  • But might I say I am making a killing just in the 2 weeks I’ve ran it. I am averaging roughly $1,500.00 a week working 5 days and at about 4 hours most days.

    Reply

  • Can a partner tell you you can open the business in my case I have a truck so can he make me stop using it

    Reply

  • im having the same issue. though my business is a branch from my family`s business, my partner whom is a 50% partner of my sub business was putting in effort when we started but as the days went by, he has slacked tremendously and not putting in 50% as what i have expected.
    What i am planning to do is to make him the general manager and as i will travel to another country to expend my business there, i will give him the General manager position and hoped he would be able to manage but he proved he could not. i will close the business in that country and start another one. thats one way of handling it.
    Give them a chance to prove and if they cannot manage then close the business and start again

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