July 9, 2025 • 11 mins
We started with a 50/50 split, but what if 'fair' isn't always best? Three years later, those shares are worth far more, proving a costly lesson in partnerships. This episode dives into the importance of proper documentation, legal counsel, and making decisions based on logic, not emotion, to avoid future disputes. What's your worst partnership story?
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00:00 Introduction and Location Update
00:09 Domain Name and Legal Matters
00:28 Business Partner Shareholding Discussion
02:05 Importance of Legal Agreements
05:53 Personal Experience and Advice
08:30 Final Thoughts and Conclusion
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:01):
So I just thought I'd give a quick update.
I'm currently at NorthWeald airfield, in Essex.
a couple of things have been going on.
I've already mentionedabout the domain name.
That's still ongoing.
We've got to the end of this weekfor interested parties to sort of
come forward and show their interest.
we've got a number of interested partiesin that and hopefully that will go well.
(00:22):
I need to speak to my lawyersabout, anticipated fees and stuff.
And, you know, I also had a chatwith, with my business partner
in one of the businesses about.
whether or not they're interested in,taking on more of the shareholding,
than they currently have.
And the reason why is basicallywhen we were setting up the
(00:43):
business initially, my view was that
really because I was not gonna beactive in the business, that my
business partner should have thegreater share of the business.
particularly given like longerterm, you know, I know what running
business is like, and I found myselfin this like in really odd position
(01:05):
of having to try and negotiate myselfdown as opposed to the opposite.
Normally used to like, you're tryingto negotiate more or get more shares
for yourself than, than whatever.
But, they were like really adamant on.
More of a 50/50 split.
Now, prior to that, I did actually alsohave a chat with my accountant and my
lawyer, tried to get my accountant toconvince, business partner about it.
(01:26):
And I think some of it came downto what I read from it was like
they wanted to make sure that.
I think it was something inside ofthem that they wanted to be able to
know with conviction that they'vebuilt something that they can then
buy back those shares at a later date.
Now, I don't know if the sort of viewpointhas probably changed on that, over time,
(01:49):
because, you know, we're three years downthe road but they would only go ahead
if it was a, a straight down the, themiddle split, which is what we've done.
I gave the option obviously to allow.
Buying back only a smallpercentage of the company from me.
And obviously I can do more if needed,but I think really the reason why I'm
(02:09):
even saying that is that It's somethingyou really need to think about if you're
getting into business with someone aboutclearly defining roles initially, which
we did, with a very clearly definedshareholders agreement, negotiated over
a period of time So there was never aconcern over the negotiation of roles.
you might wanna think more about theactual shareholding, particularly if you
(02:31):
are that person who's newer to businessand you are getting someone who's got a
bit more experience behind them, involvedand effectively you are giving away
a sweat equity, which is effectively
that support and help that you needupfront, that sort of mentoring and
guidance to get started initially, ifthat's the sort of route you're going.
(02:53):
of course there are other options.
You can, if people are willing,where they can actually operate
the business alongside you to someextent or whatever, if that's, if
that's how you're wanting to go.
But in our case, it was moreof a help at the initial point.
Get started up, get through thatinitial startup phase, get the
initial, clients onboarded, sort ofhelp them get their confidence in
(03:14):
place where basically that they couldthen go ahead and, run the business
effectively is what the plan always was.
So, yeah, it is, one of the things thatyou really need to consider if you are
getting into business with someone,you might think initially, okay, 50/50
split sounds good, but later down theline, particularly if you are the one
running it day to day and you are doingmost of the work, a point will come
(03:37):
where you might tend to resent that.
Now, I haven't been told thatthey, they're resenting it.
I'm just saying that I just, Ihave a feeling that they would
probably be more comfortable nowwith hindsight Of owning more.
And so that's why I hada discussion with them.
And it seems like it's something they'reactually quite receptive to, just not
at the moment for their own reasons.
but it's something to thinkabout from the very outset.
(03:58):
Now in terms of clearly definedgoals and sort of responsibilities.
Sometimes people are really reluctantto lay out the initial money to get a
lawyer to draw up a contract for them.
Now, there's a number of things thatcan happen whether you are the, more
senior in terms of like, experience fromrunning businesses previously, there can
definitely be issues with that because
(04:22):
if you don't lay out those terms initiallyand you've just got a verbal agreement
that isn't really written down anywherein terms of people's responsibilities and
what they'll do for their shareholdingor whatever, if there is any such,
Agreement in place at all, ifit's not properly written, not
properly documented by a lawyer.
You, you're definitely gonna come intoproblems later down the line and you may
(04:45):
find that one party who said they woulddo this, that, and the other, then don't
end up doing what they're meant to do.
And you then start to resentit and all sorts of issues can
come along, which then ends upultimately in the business failing.
And that's not what you want.
It doesn't help anyone by doing that.
So if you are in that place, I wouldstrongly, strongly suggest that
(05:07):
you do seek, proper legal adviceprior to starting your business.
if you are getting into shareholding withanyone, I don't care if it's your partner,
you know, you are the person you love themost in this world because you don't know
what happens five years down the line and
you can't just rely on the fact thatoh, you verbally agreed certain things.
(05:28):
because you can be sure that the otherparty's probably not gonna agree to that
if it ended up in court or something likethat later down the line, they're not
gonna turn around and be like, oh yeah,I did agree to give X, Y, Z or whatever.
They could just deny it.
And if you, the onusis on you to prove it.
That's my 2 cents worth Butanyway, look, this is, look
at the old war fighter there.
(05:49):
There's two of them actuallycurrently looking at, tell
me what you think about it.
What's your experience been withgetting into sort of business
partnership with someone?
This is actually myfirst one, to be honest.
I've invested in lots of other companies,but as such a minority shareholding that
it doesn't really matter, in terms of likea major shareholder other than the ones
that I own myself, this is my first one.
So it's been a learning curve myself, butI think that, if you are going through
(06:14):
this right now, and particularly if you'vegot the business partner that you are with
that is trying to negotiate themselvesdown in terms of the shareholding, I
probably seek proper advice on it beforeyou just are like adamant with, no, we
need to have this equal split or whatever.
Just because you're probably gonnaregret it down the line and I, I
(06:38):
know that for my business partner,it's gonna be an expensive mistake.
potentially.
I mean, I dunno if to see it as a mistake,but it's gonna be an expensive lesson,
let's say, where when they do buy back5% 10% from me or whatever it's going
to be, that we agree to, it's going tocost a lot more than zero with what it
would've been like when we first started.
(07:00):
So obviously time's gone bynow and I've put a lot of time
into it, so it is what it is.
And you know, the shares have value now.
they didn't really when, when it started.
So yeah, that's it.
Something to think about,really, something to think about.
Don't be afraid of, wasting that moneyon proper legal advice upfront, to
(07:25):
make sure you've got everything ironedout early doors, because if you don't,
you may find yourself, in a situationwhere you've got litigation over disputes
that, where it's really difficultfor you either side to prove what has
actually gone on, what conversationswere, what was really agreed up front.
(07:47):
And it's really taken outta your hands,in terms of what the end result would be.
if you are new to this and you've gotsomeone who is definitely not new, and
they've allowed that to happen where youhaven't got a shareholder's agreement,
personally, I would be concernedabout their motives that they haven't
insisted on a shareholder's agreement.
(08:07):
Because if they are someone who's donebusiness multiple times with other people
involved and stuff like that, then they'reprobably gonna be, they probably had
experiences before where things have gonesouth and it can cause problems down the
line, which, they may very well be awareof and maybe documenting things that you
are not, and able to prove things that youare not able to prove 'cause you weren't
(08:27):
even thinking about it ahead of time.
So yeah, that was meant to be a 30 secondvid and it's ended up being 10 minutes,
but I think it's really important.
Okay.
Otherwise I wouldn't havespent the time doing this.
Anyway.
Good luck out there.
If you've got your business,you're getting a business,
getting into a partnership.
I honestly do think though.
(08:49):
I personally think businesspartnerships are better.
That said, I would caveat that businesspartnerships are better probably if both
parties, like if you are both alreadykind of experienced in some way in
business, I'd probably say it's betterif both parties are bringing something
to the table, whether it's money or,
(09:10):
you know, one's running the salesside of things, one's running the
operations side of things or whatever.
that's probably a better way ifyou've got it, if you've got it
where someone is purely an investoror they're investing their time and
knowledge and expertise up front thatobviously you didn't want to pay for
and like a consultancy arrangement.
So you've come to anarrangement on equity instead.
(09:33):
Then just make sure they'reclearly defined in terms of scope.
What's expected of who, howthat works and whatever.
And if it is one of those arrangementswhere it is for sweat equity and
you are effectively giving awayshareholding in your idea, particularly
if it's your idea and you want someoneinvolved and it's sweat equity,
(09:59):
for them to actually work their wayinto the business, then be really
careful, speak to a lawyer about that,because there can be ways that you can
release the equity in stages, dependingon certain performance metrics being
met over time, as opposed to justupfront releasing it all at once.
that's not the situation with us.
ours is very different.
It's very clear, defined upfront, but.
(10:21):
Be weary of that.
If you are the person with the idea,you wanna get this business started
and you're trying to get someone elseinvolved of that particular thing because
you could end up giving away substantialchunk of your business to someone who
is under no obligation whatsoever,legally speaking to do anything for you.
but you are legally bound to writethem a cheque when you distribute your
(10:44):
dividends, if your business works out.
Okay, so better in mind and I need togo, 'cause I've gotta go and view another
property and it's about half hour drive.
Oh crap.
Okay.
I thought the time, I thought theminutes on the screen was the time.
It's not Thank because Iwould've been late anyway.
Bye.
So I just thought I'd give a quick update.
I'm currently at NorthWeald airfield, in Essex.
a couple of things have been going on.
I've already mentionedabout the domain name.
That's still ongoing.
We've got to the end of this weekfor interested parties to sort of
come forward and show their interest.
we've got a number of interested partiesin that and hopefully that will go well.
(00:22):
I need to speak to my lawyersabout, anticipated fees and stuff.
And, you know, I also had a chatwith, with my business partner
in one of the businesses about.
whether or not they're interested in,taking on more of the shareholding,
than they currently have.
And the reason why is basicallywhen we were setting up the
(00:43):
business initially, my view was that
really because I was not gonna beactive in the business, that my
business partner should have thegreater share of the business.
particularly given like longerterm, you know, I know what running
business is like, and I found myselfin this like in really odd position
(01:05):
of having to try and negotiate myselfdown as opposed to the opposite.
Normally used to like, you're tryingto negotiate more or get more shares
for yourself than, than whatever.
But, they were like really adamant on.
More of a 50/50 split.
Now, prior to that, I did actually alsohave a chat with my accountant and my
lawyer, tried to get my accountant toconvince, business partner about it.
(01:26):
And I think some of it came downto what I read from it was like
they wanted to make sure that.
I think it was something inside ofthem that they wanted to be able to
know with conviction that they'vebuilt something that they can then
buy back those shares at a later date.
Now, I don't know if the sort of viewpointhas probably changed on that, over time,
(01:49):
because, you know, we're three years downthe road but they would only go ahead
if it was a, a straight down the, themiddle split, which is what we've done.
I gave the option obviously to allow.
Buying back only a smallpercentage of the company from me.
And obviously I can do more if needed,but I think really the reason why I'm
(02:09):
even saying that is that It's somethingyou really need to think about if you're
getting into business with someone aboutclearly defining roles initially, which
we did, with a very clearly definedshareholders agreement, negotiated over
a period of time So there was never aconcern over the negotiation of roles.
you might wanna think more about theactual shareholding, particularly if you
(02:31):
are that person who's newer to businessand you are getting someone who's got a
bit more experience behind them, involvedand effectively you are giving away
a sweat equity, which is effectively
that support and help that you needupfront, that sort of mentoring and
guidance to get started initially, ifthat's the sort of route you're going.
(02:53):
of course there are other options.
You can, if people are willing,where they can actually operate
the business alongside you to someextent or whatever, if that's, if
that's how you're wanting to go.
But in our case, it was moreof a help at the initial point.
Get started up, get through thatinitial startup phase, get the
initial, clients onboarded, sort ofhelp them get their confidence in
(03:14):
place where basically that they couldthen go ahead and, run the business
effectively is what the plan always was.
So, yeah, it is, one of the things thatyou really need to consider if you are
getting into business with someone,you might think initially, okay, 50/50
split sounds good, but later down theline, particularly if you are the one
running it day to day and you are doingmost of the work, a point will come
(03:37):
where you might tend to resent that.
Now, I haven't been told thatthey, they're resenting it.
I'm just saying that I just, Ihave a feeling that they would
probably be more comfortable nowwith hindsight Of owning more.
And so that's why I hada discussion with them.
And it seems like it's something they'reactually quite receptive to, just not
at the moment for their own reasons.
but it's something to thinkabout from the very outset.
(03:58):
Now in terms of clearly definedgoals and sort of responsibilities.
Sometimes people are really reluctantto lay out the initial money to get a
lawyer to draw up a contract for them.
Now, there's a number of things thatcan happen whether you are the, more
senior in terms of like, experience fromrunning businesses previously, there can
definitely be issues with that because
(04:22):
if you don't lay out those terms initiallyand you've just got a verbal agreement
that isn't really written down anywherein terms of people's responsibilities and
what they'll do for their shareholdingor whatever, if there is any such,
Agreement in place at all, ifit's not properly written, not
properly documented by a lawyer.
You, you're definitely gonna come intoproblems later down the line and you may
(04:45):
find that one party who said they woulddo this, that, and the other, then don't
end up doing what they're meant to do.
And you then start to resentit and all sorts of issues can
come along, which then ends upultimately in the business failing.
And that's not what you want.
It doesn't help anyone by doing that.
So if you are in that place, I wouldstrongly, strongly suggest that
(05:07):
you do seek, proper legal adviceprior to starting your business.
if you are getting into shareholding withanyone, I don't care if it's your partner,
you know, you are the person you love themost in this world because you don't know
what happens five years down the line and
you can't just rely on the fact thatoh, you verbally agreed certain things.
(05:28):
because you can be sure that the otherparty's probably not gonna agree to that
if it ended up in court or something likethat later down the line, they're not
gonna turn around and be like, oh yeah,I did agree to give X, Y, Z or whatever.
They could just deny it.
And if you, the onusis on you to prove it.
That's my 2 cents worth Butanyway, look, this is, look
at the old war fighter there.
(05:49):
There's two of them actuallycurrently looking at, tell
me what you think about it.
What's your experience been withgetting into sort of business
partnership with someone?
This is actually myfirst one, to be honest.
I've invested in lots of other companies,but as such a minority shareholding that
it doesn't really matter, in terms of likea major shareholder other than the ones
that I own myself, this is my first one.
So it's been a learning curve myself, butI think that, if you are going through
(06:14):
this right now, and particularly if you'vegot the business partner that you are with
that is trying to negotiate themselvesdown in terms of the shareholding, I
probably seek proper advice on it beforeyou just are like adamant with, no, we
need to have this equal split or whatever.
Just because you're probably gonnaregret it down the line and I, I
(06:38):
know that for my business partner,it's gonna be an expensive mistake.
potentially.
I mean, I dunno if to see it as a mistake,but it's gonna be an expensive lesson,
let's say, where when they do buy back5% 10% from me or whatever it's going
to be, that we agree to, it's going tocost a lot more than zero with what it
would've been like when we first started.
(07:00):
So obviously time's gone bynow and I've put a lot of time
into it, so it is what it is.
And you know, the shares have value now.
they didn't really when, when it started.
So yeah, that's it.
Something to think about,really, something to think about.
Don't be afraid of, wasting that moneyon proper legal advice upfront, to
(07:25):
make sure you've got everything ironedout early doors, because if you don't,
you may find yourself, in a situationwhere you've got litigation over disputes
that, where it's really difficultfor you either side to prove what has
actually gone on, what conversationswere, what was really agreed up front.
(07:47):
And it's really taken outta your hands,in terms of what the end result would be.
if you are new to this and you've gotsomeone who is definitely not new, and
they've allowed that to happen where youhaven't got a shareholder's agreement,
personally, I would be concernedabout their motives that they haven't
insisted on a shareholder's agreement.
(08:07):
Because if they are someone who's donebusiness multiple times with other people
involved and stuff like that, then they'reprobably gonna be, they probably had
experiences before where things have gonesouth and it can cause problems down the
line, which, they may very well be awareof and maybe documenting things that you
are not, and able to prove things that youare not able to prove 'cause you weren't
(08:27):
even thinking about it ahead of time.
So yeah, that was meant to be a 30 secondvid and it's ended up being 10 minutes,
but I think it's really important.
Okay.
Otherwise I wouldn't havespent the time doing this.
Anyway.
Good luck out there.
If you've got your business,you're getting a business,
getting into a partnership.
I honestly do think though.
(08:49):
I personally think businesspartnerships are better.
That said, I would caveat that businesspartnerships are better probably if both
parties, like if you are both alreadykind of experienced in some way in
business, I'd probably say it's betterif both parties are bringing something
to the table, whether it's money or,
(09:10):
you know, one's running the salesside of things, one's running the
operations side of things or whatever.
that's probably a better way ifyou've got it, if you've got it
where someone is purely an investoror they're investing their time and
knowledge and expertise up front thatobviously you didn't want to pay for
and like a consultancy arrangement.
So you've come to anarrangement on equity instead.
(09:33):
Then just make sure they'reclearly defined in terms of scope.
What's expected of who, howthat works and whatever.
And if it is one of those arrangementswhere it is for sweat equity and
you are effectively giving awayshareholding in your idea, particularly
if it's your idea and you want someoneinvolved and it's sweat equity,
(09:59):
for them to actually work their wayinto the business, then be really
careful, speak to a lawyer about that,because there can be ways that you can
release the equity in stages, dependingon certain performance metrics being
met over time, as opposed to justupfront releasing it all at once.
that's not the situation with us.
ours is very different.
It's very clear, defined upfront, but.
(10:21):
Be weary of that.
If you are the person with the idea,you wanna get this business started
and you're trying to get someone elseinvolved of that particular thing because
you could end up giving away substantialchunk of your business to someone who
is under no obligation whatsoever,legally speaking to do anything for you.
but you are legally bound to writethem a cheque when you distribute your
(10:44):
dividends, if your business works out.
Okay, so better in mind and I need togo, 'cause I've gotta go and view another
property and it's about half hour drive.
Oh crap.
Okay.
I thought the time, I thought theminutes on the screen was the time.
It's not Thank because Iwould've been late anyway.
Bye.
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