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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

To stick to terms of agreement with friends

265 replies

Bungybungy · 14/03/2024 10:05

Burner account. I’ve been friends with F for decades. She had a large social media presence. I’ve worked hard to establish my business and have been successful. I’m proud of what I’ve achieved. 5 years ago, F came to me with a business idea, wanting to set up herself. She didn’t at that time have the funds to set up by herself so I agreed to invest a not insignificant sum in return for 20% of the business. She was happy with that deal, and because I work in legal services, I got our guy who deals with contracts to draw up an agreement specifying what rights and responsibilities etc. Although this was an area she had worked in before, she had never actually run a business before. I guess that’s why she came to me in part, so it wasn’t just about the money. To her credit, and using my advice, the business has grown quickly and is well known. At the time of the investment I understood that I could just as easily have lost my money completely.

Our relationship is now very difficult as I’ve realised over the last 2 years that she’s been distancing herself from me, which is fine, relationships come and go, but last week I got a letter from her solicitor telling me that she was unhappy with my ownership and that she wanted to buy me out for just over my initial investment. Given the business is now worth several times over my initial investment, I can’t accept that (she put close to no money in herself). For her to pay me off would cost her 5 times my initial investment. AIBU to expect her to honour the agreement? I know she’s contractually bound but she’s been so vile about this, I’m second guessing myself. She keeps threatening to “out” my business via her social media(I have no idea what this means). I’m actually scared about what she could do.

OP posts:
volie · 14/03/2024 14:05

Yeah, stick to your guns. You helped get her off the ground, and you were willing to risk losing your investment.

Although this is why money and friends don't mix. I'm self-employed and won't do paid work for friends. I'll only ever do quick favours for free, just to help. If they need more, I point them towards contacts.

MikeRafone · 14/03/2024 14:07

Your friendship is lost - so its not as if you have that to save

the threats could be handled with a strongly worded solicitors letter, this would prevent rather than cure the "outing" whatever that is

Ask for 5 and settle on 4 times your original investment

LaurieFairyCake · 14/03/2024 15:04

Fuck that fucking fucker

Get your money 💰

Isittimeformynapyet · 14/03/2024 15:04

hangingonfordearlife1 · 14/03/2024 12:28

well counter threaten to put her as a bitch then!

Show quote history

Is that what you'd do @hangingonfordearlife1? Stoop to her level and muddy your own reputation?

OP, surely some of your colleagues are experienced in this field and well placed to give you better advice than we are.

Was the original agreement written in plain English or in complicated legalese? So would her threat to claim ignorance hold any water at all?

Original poster
Bungybungy · 14/03/2024 15:20

Isittimeformynapyet · 14/03/2024 15:04

Is that what you'd do @hangingonfordearlife1? Stoop to her level and muddy your own reputation?

OP, surely some of your colleagues are experienced in this field and well placed to give you better advice than we are.

Was the original agreement written in plain English or in complicated legalese? So would her threat to claim ignorance hold any water at all?

Show quote history

I’m not asking for any legal advice and I have had advice that the contract is perfectly valid. What I was wondering was whether I was missing some important moral aspect to this but thanks to previous comments I can see that’s what it is trying to do here is chance her arm at getting me out of the deal, without any consequence to herself. As for the terms of the contract, being in legalese, this is a woman in her late 30s, who is held several high power jobs over the years and was completely able to get any advice before she does she wanted to.

OP posts:
Isittimeformynapyet · 14/03/2024 15:25

Bungybungy · 14/03/2024 15:20

I’m not asking for any legal advice and I have had advice that the contract is perfectly valid. What I was wondering was whether I was missing some important moral aspect to this but thanks to previous comments I can see that’s what it is trying to do here is chance her arm at getting me out of the deal, without any consequence to herself. As for the terms of the contract, being in legalese, this is a woman in her late 30s, who is held several high power jobs over the years and was completely able to get any advice before she does she wanted to.

Show quote history

I get it, sorry.

I'm 100% sure you are in the clear morally and I hope this nasty situation is dealt with swiftly. All the best to you OP.

LifeExperience · 14/03/2024 15:27

She signed a contract and now doesn't want to live up to it. Get a solicitor and don't let her lowball you.

moonfacer · 14/03/2024 15:29

OP, is she put next to no money in and you paid a lot in but only got a 20% share, it sounds like she got a good deal anyway.

So please don’t feel any moral doubt, you are entitled to every penny of your share of the current value of the business.

AhNowTed · 14/03/2024 15:34

OP she put no money in, so no risk to herself.

You bore ALL the risk.

It was an investment - you could have lost your not insignificant amount.

She would have lost nothing.

Thems the terms.

NowYouSee · 14/03/2024 15:40

Obviously YANBU. However I would add the risk that if she really wants to be petulant, unless there is a non compete in the agreement or similar she could attempt to walk away from the company and start up a new one by herself.

StockpotSoup · 14/03/2024 17:18

I wonder why she was so keen to offer you a share of the business rather than asking you for a loan? Or better still, asking a bank for a business loan, meaning no blurring of boundaries?

My theory would be:

  1. She couldn’t get the amount she wanted on the terms she wanted from a bank.

  2. She knew that if she asked you for a loan and the business went tits up (as so many new businesses do), she’d have to pay you back, whereas 20% of a worthless business is just that - worthless.

  3. Her success has surpassed her expectations - and while giving you your 20% didn’t rankle so much when she was making a modest profit, 20% suddenly seems a lot when the sums involved are so much bigger.

If she’s savvy enough to have worked out point 2, she’s too savvy to have been bamboozled into the agreement as she’s now claiming.

Respond to the offer via her solicitor stating that you have seen the accounts and you are aware the offer significantly undervalues the company. As such you are rejecting the offer. I’d either not make a counter offer at all, or make one way beyond the value of your shares in the hope that any negotiation downwards still gets you a favourable deal.

Original poster
Bungybungy · 14/03/2024 17:26

StockpotSoup · 14/03/2024 17:18

I wonder why she was so keen to offer you a share of the business rather than asking you for a loan? Or better still, asking a bank for a business loan, meaning no blurring of boundaries?

My theory would be:

  1. She couldn’t get the amount she wanted on the terms she wanted from a bank.

  2. She knew that if she asked you for a loan and the business went tits up (as so many new businesses do), she’d have to pay you back, whereas 20% of a worthless business is just that - worthless.

  3. Her success has surpassed her expectations - and while giving you your 20% didn’t rankle so much when she was making a modest profit, 20% suddenly seems a lot when the sums involved are so much bigger.

If she’s savvy enough to have worked out point 2, she’s too savvy to have been bamboozled into the agreement as she’s now claiming.

Respond to the offer via her solicitor stating that you have seen the accounts and you are aware the offer significantly undervalues the company. As such you are rejecting the offer. I’d either not make a counter offer at all, or make one way beyond the value of your shares in the hope that any negotiation downwards still gets you a favourable deal.

It’s a combination of all 3, I think.

OP posts:
lala567 · 14/03/2024 17:28

Did you put all of the money in. Why do you only own 20%

betterangels · 14/03/2024 17:29

Picklestop · 14/03/2024 10:16

I don’t think I would be demanding five times my initial investment back from a friend. But a little over your initial investment is not on either. Surely there is some middle ground? How is the business being valued anyway?

But she's clearly not a friend, if she's distancing herself. Agreement should be honoured. YANBU, OP.

Original poster
Bungybungy · 14/03/2024 18:15

lala567 · 14/03/2024 17:28

Did you put all of the money in. Why do you only own 20%

Because I’ve not done any of the work, marketing etc, only advised her when needed. She put in a few thousand I think.

OP posts:
Londonscallingme · 14/03/2024 18:19

If she wanted a loan she should have asked for one. She agreed to you investing in her business so you should agree to less than what was promised.

ArrestHer · 14/03/2024 18:30

This is a business deal. Whether you were still friends or not is irrelevant.

if you own 20% of the business and she wants you to not own it she needs to buy you out at the correct value of your ownership share as it is now.

if you were even considering reducing the amount you’d accept surely that horse bolted when she threatened you with the social media stuff.

solicitors only now I think, as PP have said, and hold out for what you own.

ThirtyThrillionThreeTrees · 14/03/2024 18:57

There is a clear contract signed by both parties.

You aren't missing anything morally - in fact she would have nothing without you.

I wouldn't think twice about it. She's absolutely trying to take advantage and pull a fast one.

Bearbookagainandagain · 14/03/2024 19:11

In your shoes, I would negotiate to buy her out. If the relationship is sour, you are better off distancing yourself.
She made an offer, reject it and make your own. From what you are saying , you have good evidence to support your claim. Hopefully you can find a compromise she will accept.

CommentNow · 14/03/2024 19:19

Of course she is having a tantrum.

If it works she stands to gain a lot.

You had a contract for exactly this reason.

She doesnt like you and she is not your friend. The sooner you see this as a business transaction and a company bot treating you very well, the better. You need a fighting instinct.

Allwelcone · 14/03/2024 19:19

You could begin non-friendship clouded negotiations.
Or
Truly moral stance, do you need the money? Could you let it go and let her be the nasty person here? Or would you always feel bitter about it.

I guess you could refuse to be bought out at all and hang on to the 20% forever...

StockpotSoup · 14/03/2024 19:29

Allwelcone · 14/03/2024 19:19

You could begin non-friendship clouded negotiations.
Or
Truly moral stance, do you need the money? Could you let it go and let her be the nasty person here? Or would you always feel bitter about it.

I guess you could refuse to be bought out at all and hang on to the 20% forever...

Yeah, and with the money you get for selling your 20% for a fraction of what it’s worth, buy a flight to Suckersville, USA.

Monkeyfeat · 14/03/2024 19:34

Allwelcone · 14/03/2024 19:19

You could begin non-friendship clouded negotiations.
Or
Truly moral stance, do you need the money? Could you let it go and let her be the nasty person here? Or would you always feel bitter about it.

I guess you could refuse to be bought out at all and hang on to the 20% forever...

Moral stance? That's just stupid, not moral.... That makes no sense whatsoever to do. Thankfully the op sounds sensible and won't do this

OoooohSpookyGhost · 14/03/2024 19:37

I think it’s very clear here that the only moral thing to do is to stick to the contract and tell her you will take your 20% at market rate. The reason this is moral is for several reasons:

  1. When you agree a contract you stick to it.
  2. You have a moral obligation to yourself to have strong boundaries.
  3. You are doing her a favour by showing her, in real time, that actions have consequences. The action was the agreement, the consequences are your cut. It’s very simple. If you take less then you are doing her a huge disservice and allowing her to continue to be a brat and someone else down the line will suffer the consequences. Being a good friend (irregardless of HER not being a friend) means you hold your friend to account.

Congratulations, OP, on a sound business investment. Now stop feeling bad. You have no reason to.

SerendipityJane · 14/03/2024 19:37

I take it she's getting her advice from "The Art of the Deal" ?