One partner wants out. Or you want to buy them out. Between the two sits a figure, an emotion, and often years of things left unsaid. Negotiating a buyout of a partner's shares is not a financial transaction like any other: seller and buyer know each other, may well cross paths again, and each knows exactly where the other one hurts. That is what makes the exercise both trickier and more manoeuvrable than an ordinary sale. Here is the method I use to set a defensible price without turning the table into a courtroom.
Why this kind of negotiation nearly always goes off the rails
Three traps come up time and again. The first: each side has its own valuation, worked out with whichever method suits it best (an EBITDA multiple for one, asset value for the other). The second: emotion. You are not buying the shares of a stranger, but those of a former ally, and resentment sends the numbers soaring or crashing. The third: the information gap. The seller who stays operational knows the order book; the buyer sometimes finds out only later. The negotiation is won upstream, by neutralising these three biases before anyone talks price.
Anchor on an objective basis, not on a round number
The first offer carries weight: it sets the terrain. Use anchoring, but an anchor dressed in method. Never say "I'm offering 200,000". Say "applying a multiple of 4x the average EBITDA over the last three financial years, restated for your remuneration, we arrive at 210,000". The anchor is no longer a whim, it becomes a deduction. To hold that price, lean on objective criteria: sector comparables, a report from an independent chartered accountant, a valuation clause already written into the shareholders' agreement. When the price flows from a rule rather than from a balance of power, the other party is not giving in to you: they are giving in to the method. That is far easier to accept.
The story of Karim and Sebastien: a 40,000 gap settled in one sentence
Two partners in an engineering consultancy, split 50/50. Sebastien wants to leave to launch another project. He is asking 260,000 for his shares. Karim, who is staying and will have to find the cash, refuses to go above 220,000. Deadlock for six weeks, curt emails, meetings that end nowhere.
By the time Karim calls me in, he is ready to settle at 240,000 "just to be done with it". I talk him out of it. First step: instead of going straight for the figure, he uses tactical empathy. In the meeting he opens with: "You built half of this company, it's only right that you want to reap your fair share of it." Sebastien, disarmed, drops his guard a notch. Then Karim reflects the real objection back using the mirroring technique: "Your fair share?" Silence. And there Sebastien lets slip the real issue: he is afraid that the big contract currently in the works, the one he brought in, will make the value shoot up right after he leaves. The price was never the problem. The fear of being cheated on the future was.
The solution, then, lay not in a fixed price but in sharing the risk. Karim proposes: 225,000 in cash, plus a price supplement (an earn-out) of 20,000 linked to the actual collection of that famous contract. He uses give-and-take: "I'll go up to 225 right now, on condition that we tie the rest to what actually comes in. If the contract lands, you get your 20,000." Sebastien, whose BATNA, taking the matter to court for a judicial dissolution, was long, costly and value-destroying, accepts within twenty minutes. Karim's likely real cost: 245,000, but spread out, secured, and without a lawsuit. Sebastien, for his part, feels he has been heard, not fleeced.
Always put a figure on your fallback before you walk in
Sebastien folded because his alternative was poor. Yours must be calculated, not imagined. Before any meeting, coldly assess your BATNA: what happens if you don't sign? Governance gridlock, a falling-out that drags down operations, a withdrawal procedure, a court-appointed valuation under article 1843-4 of the French Civil Code whose timing and outcome you control neither. Put a figure on that scenario in pounds and in months. A clear-eyed BATNA tells you how far to go, and above all when to get up from the table.
Wielding silence and withdrawal without severing the bond
After a counter-offer, say nothing. Strategic silence pushes the other side to fill the void, often by improving their position. And if your partner digs in on an unrealistic figure, a measured withdrawal, "let's each take a fortnight, and have the valuation settled by a shared expert", resets the frame without breaking it. The nuance here is crucial: you are negotiating with someone you know. The withdrawal must target the figure, never the person. To lock in your preparation, practise on real cases in our simulator, or find the technique suited to your situation in the library.
FAQ
How do you set a price when no partner agrees on the valuation?
Step out of the tug-of-war by delegating the calculation to a rule. Agree together on a method (an EBITDA multiple, revalued net assets, or a combination) and, if the disagreement persists, appoint an independent chartered accountant or an expert under article 1843-4 of the French Civil Code. The price stops being an opinion and becomes a piece of data: nobody loses face by falling in line with it.
Should you pay in cash or spread the share buyout out?
Spreading it out is often your best lever. A price supplement (an earn-out) linked to future results answers the seller's classic fear, "what if the company is worth more after I've gone?", while protecting your cash flow. You turn a disagreement about price into an agreement about sharing the risk, which is what unblocks most situations.
