I am selling my shares to my other partner out of a 50/50 partnership. We are on negotiating stage and he wants the deal staggered. I proposed I retain my 50% in the worst case he defaulted on his payment and he counters with an offer that it should be pro rated and every time he makes payment means equity bought on his side ( less the collateral amount which is 15% of the total amount we agreed upon on)
Here are the terms we have so far
- total amount agreed is 125k USD and initial payment upfront would be 36k. with the deal lasting up to 6 months.
- my partner wants total control of the business during the deal.
- partner requested that payment can be made as long as it is within the 6 month period.
- each payment means equity bought
- if he defaults on his payment I get to keep only 18k as collateral and I keep the remaining shares he hasn't bought (amount paid-collateral / total amount)
I was thinking the worst case for example he defaults on his payment I am left with less than 50% so he has major control of the business and I really don't want to have to deal with it at a later time. An advisor of mine advised that the offer is a bad arrangement, given that I totally want out of the business and just want the cash we agreed upon on. I am looking for a second opinion if the deal considerable ? What are the negative implications if I were to accept the terms?