Question of the Week:
I wonder if I may prevail upon you to comment on a question/concern I have about a potential business partnership my husband is considering. Thank you
so much in advance for any time or response you may be willing to offer us.
My husband has been offered a 25% share in a company. The owner is currently severing ties with his partner because he’d like to focus on a more specific aspect of the work. There is also confusion over shared resources such as administrative and accounting responsibilities. So far (about 3 months) the owner has been unable to provide a balance sheet and or income statement.
Additionally, I am concerned that the owner is divorced and has put the LLC (his company) in someone else’s name to protect any future assets from the business from his ex-wife.
My husband says the owner’s personal life is none of our business and we should give him time to produce the financial documents.
The owner is asking for $225,000.00 to invest in his company and predicts high returns within 48-36 months. I love my husband very much and want to support him but don’t want to get tangled up in a mess.
Confused and not wanting a conflict with my loving husband and father of 4 fairly well adjusted adults.
Thank you in advance,
First of all, there are all too many women who do not have a loving husband or well-adjusted kids, so you start out ahead of the game.
We see your question as mainly asking how to combine the two contradictory functions of a wife vis-a-vis her husband as described in Genesis as, “a helper opposite him.” That is to say, helper and advisor even when her advice is counter to his wishes.
We have many unanswered questions including about how the two of you have collaborated up till this point. For example, have business decisions until now been made jointly, have you bought a business before, did this opportunity come through a business broker or through relatives or friends, and is there a history of you instinctively reacting negatively to your husband wanting to try new things?
If $225,000 gives you 25% ownership, then the owner values his business at $900,000. How exactly does he arrive at that figure and how does he justify that pre-money valuation without disclosing financials? What is the purpose of the $225,000? Will it pay off debts? Does it go into the pocket of the seller? Who will authorize disbursement? How will decision-making be settled? These and many other questions any competent advisor would encourage your husband to explore thoroughly.
We don’t agree that the owner’s personal life is none of your business. This might be true if he was a shopkeeper in a small town in the Scottish Hebrides whom you’d never meet and with whom you have no business. But for someone who will own 75% of your major investment, almost nothing about him is ‘none of your business’. To put it perhaps more bluntly, if a man’s wife can’t trust him, why would I?
On the more emotional side we have questions as to whether your husband is seeing this as “his last chance” to make his fortune, if he is feeling major financial pressure, or if he is unhappy with his present source of income. Has he been searching for a while or did this opportunity somehow catch his fancy and grab his emotions?
We are not the only observers of the economy to note that for several reasons including demographic, more and more businesses are likely to be on the market over the next few years, so this opportunity should be compared with others.
Your concerns are all valid, but as with many other major life decisions it is vital to recognize that the marriage and couple win or lose together. Your husband must not feel that turning down this offer is a “win” for you and a “loss” for him. There are many questions about the business that need answering, including complete financial disclosure and talking to the departing partner, if possible. Could it be that your husband already agrees that no money should change hands until more information is revealed, but he doesn’t want to reject it out-of-hand while you would prefer to end the conversation now?
We are obviously aware that it is not your husband asking our advice which means that the real question before us is not a financial question but a marriage question. How do we get your husband to see you as a full partner in this next phase of your financial life? There are different approaches and of course we don’t know you both well enough to say which will work. You could put out your concerns and suggestions for moving forward in a letter. You could identify an older and financially successful male friend or relative whom your husband respects or would respect, and ask your husband to discuss the deal with him in a meeting that includes you. You could schedule a min-vacation or retreat somewhere you both enjoy and, away from your usual environment, ask for a full and open discussion of the family’s financial philosophy and goals in the context of which, this deal would naturally be explored. While making it clear that you respect and support his pursuit of a business opportunity, you are eager to explore it with the guidance of an outside party, perhaps a Ramsey financial advisor, whose expertise is in evaluating businesses, spotting both pitfalls and potentials. This person will help the two of you understand what risk is reasonable and what is not, the legal ramifications of whose name is on the LLC and many other details that need to be evaluated before laying down hard cash.
You are fulfilling your role as a helper “opposite him” by not cheerleading unquestioningly any option he proposes. But we’d recommend that you find a way to do this while your love and respect for him is strongly in evidence. This will help ensure that the dynamic is the two of you as a bonded, loving unit, against the outside challenge rather than him feeling ‘attacked’ by you with you undermining his dreams instead of helping him bring them to fruition.
We hope this provides a positive path forward,
Rabbi Daniel and Susan Lapin
Is there a man in your life who graciously carries the load of work and family?
One of the best tools for a happy warrior is financial wisdom. The Financial Prosperity Collection – a 10-session online course will help you apply practical and specific strategies to transform your financial destiny.
This financial “toolkit” is $20 off through Father’s Day. Enter FATHERS20 at checkout to get the discount. Take advantage of the sale today!