What if two partners, let’s call them Joe and Steve, have irreconcilable differences? Particularly since Joe put up the money while Steve put in the sweat-equity. They have built a business that’s worth several million dollars, but Steve is hacked-off because Joe’s draining the business. Unfortunately, Steve doesn’t have the money to buy Joe out. So basically, Steve’s screwed. But if he’d used a little creative financing, this might not have been the case.
Next post, we’ll look at some solutions our hypothetical examples could have adopted.