{"id":129,"date":"2015-04-13T16:46:37","date_gmt":"2015-04-13T21:46:37","guid":{"rendered":"http:\/\/openproduce.org\/blog\/2015\/another-owner-exits\/"},"modified":"2015-04-13T16:46:37","modified_gmt":"2015-04-13T21:46:37","slug":"another-owner-exits","status":"publish","type":"post","link":"https:\/\/openproduce.org\/index.php\/2015\/04\/13\/another-owner-exits\/","title":{"rendered":"another owner exits"},"content":{"rendered":"

Open Produce was started way back in 2008 by three people — Andrew, Steven, and Gabi. Towards
\nthe very, very beginning, Gabi bowed out (you can read her reasons why here<\/a>) and for the first
\ntwo years or so, Andrew and Steven worked side by side growing the business.<\/p>\n

At some point in 2010, Andrew left the day-to-day operations but remained involved as an owner,
\nin a more board-like capacity. He was weighed in on big decisions and helped tackle big
\nproblems and was part of large steering conversions. I (Steven) continued to run the day-to-day
\nand pulled a (modest) salary; Andrew was working only for the promise of his share of future
\nprofits.<\/p>\n

That arrangement worked well for a number of years, but as 2014 drew to a close we both felt it
\nmight be time to renegotiate. Andrew had moved to California and was focusing on other
\nprojects, while I felt any new direction the store took — for better or worse — would be on my
\nshoulders, and I should take a larger share of risk and reward. Additionally, we’ve been
\npositioning to apply for a license to sell beer and wine, and changing ownership before that
\nprocess is way easier than after, so we had some incentive to move sooner rather than later<\/p>\n

So the question was how to reward Andrew for his initial ideas, two years of full-time work, and
\nseveral years of board-level stewardship, without bankrupting me. We came to this arrangement:<\/p>\n

– I would pay Andrew $71,000 for his half of the business.<\/p>\n

– We would subtract from that some money Andrew owed the business from some financial hijinks in
\n2011.<\/p>\n

– I would pay the remainder in the form of a promissory note (a loan), payable over 20 years, at
\n4% interest. I can pre-pay at any time, and can skip two years of payments without penalty, to
\nprovide me with a little flexibility.<\/p>\n

– As part of the deal, I also agreed to have Open Produce repay the original $35,000 loan from his
\nfather within the next 7 years, which is something we had been hoping to do anyhow (the original
\nloan agreement requires us to pay him back by the end of 2009, but he has graciously allowed us
\nto delay without penalty other than the normal interest).<\/p>\n

That might seem like a lot of money, and it is — but spread over 20 years it comes to a more
\nmanageable figure of just over $3,000 per year. Essentially, instead of Andrew getting half of
\nfuture profits forever, I am promising Andrew the first $3,000 of yearly profits from the
\nbusiness until 2034, no matter how much the business makes, even if it makes no money at all.<\/p>\n

Is this a good deal? It depends on how the business does. If it goes out of business next
\nyear, it’s a horrible deal for me. If it starts profiting $50k\/year and stays that way for many
\nyears, then it’s a very good deal for me. But overall we both feel it’s a fair deal, insulating
\nAndrew for future risk but also removing him future profit. Plus I’m free to take the business
\nin new direction without his agreement, and he’s free to remove the burdens of business
\nownership from his mental load. Only time will tell who got the better deal financially, but
\nwe’re both happy with the sale right now.<\/p>\n

Of course, the same compatibility that allowed us to be good business partners helped with this
\nwhole process immensely. We were on the same page, shared the same values, and had good
\ncommunication. And while we both wanted to get a good deal for ourselves, we weren’t out to
\nscrew the other person. After we came to an initial agreement, though, we decided this was
\nenough money it was worth getting some lawyers to haggle over the wording, and then we finalized
\nthe deal, effective December 1st, 2014, making me the sole owner.<\/p>\n

And then I set up an automatic recurring monthly payment for the next 239 months. December
\n2034, here we come!<\/p>\n","protected":false},"excerpt":{"rendered":"

Open Produce was started way back in 2008 by three people — Andrew, Steven, and Gabi. Towards
\nthe very, very beginning, Gabi bowed out (you can read her reasons why here<\/a>) and for the …<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[],"tags":[],"class_list":["post-129","post","type-post","status-publish","format-standard","hentry"],"acf":[],"_links":{"self":[{"href":"https:\/\/openproduce.org\/index.php\/wp-json\/wp\/v2\/posts\/129","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/openproduce.org\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/openproduce.org\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/openproduce.org\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/openproduce.org\/index.php\/wp-json\/wp\/v2\/comments?post=129"}],"version-history":[{"count":0,"href":"https:\/\/openproduce.org\/index.php\/wp-json\/wp\/v2\/posts\/129\/revisions"}],"wp:attachment":[{"href":"https:\/\/openproduce.org\/index.php\/wp-json\/wp\/v2\/media?parent=129"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/openproduce.org\/index.php\/wp-json\/wp\/v2\/categories?post=129"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/openproduce.org\/index.php\/wp-json\/wp\/v2\/tags?post=129"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}