Built to Sell Radio

Ep 483 Exit Story: Frank Shultz on Escaping the 50/50 Trap and Buying Out a Partner

19 snips
Feb 28, 2025
Frank Shultz, co-founder of Infinite Blue and currently with United Effects Ventures, shares his journey through a challenging 50/50 partnership. He discusses the complexities of buying out a co-founder amidst disagreements and financial strains. Listeners learn about the critical importance of business continuity planning and the emotional hurdles tied to partner dynamics. Frank also reflects on navigating growth, leadership restructuring, and the impact of market conditions during acquisitions, all while emphasizing communication and strategic decision-making.
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ANECDOTE

Dangers of 50/50 Partnerships

  • Frank's 50/50 partnership rapidly soured as roles and responsibilities diverged.
  • Discontent led to tension that adversely impacted employees and product development.
ADVICE

Avoid 50/50 Without Protection

  • Avoid 50/50 splits without deadlock resolution clauses in operating agreements.
  • Use proper legal structuring upfront to protect against future partnership conflicts.
ANECDOTE

Buying Out Partner With Investment

  • Frank bought out his partner using outside capital for an eight-figure valuation.
  • He secured an investment round that bought almost half the business ensuring majority control for Frank.
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