Ending a boat partnership: what should I do?

[nigelmercier]

I bought a 25% share in a 2000 built Bavaria 47 in 2005. In 2008 two of the other 25% shareholders wanted to withdraw - they thought they were going to make money! The remaining partner and I persuaded a friend to buy a 25% share at £X (which was the 2005 share price less 10% PA). We couldn't find a fourth partner, so I bought a second 25% share, also at £X. The arrangement is that even though I own 50%, we split the expenses three ways.

The first partner now has no money, and seems to have given up on the idea; the second partner wants to move away from the Canary Islands after only a year. We recently had a vote where the first partner abstained, so the status quo holds and we stay; however, I am fed up with having to do battle. It isn't only this, I want to make improvements, but they get blocked. You get the idea.

I am currently considering my options, and plan to send the following to my boat partners; what do you think? Please don't discuss actual figures in this thread.


Although I think the Canary Islands are the perfect location, for all the reasons given previously, it is inevitable that one day we will all have seen enough of them. But this time is a long way off, certainly not in the next couple of years. We haven’t even explored the options of being based in the other western islands. Having doubts about our long-term situation is un-stabilising and disruptive to future plans. I therefore feel that I am unable to continue in our partnership as it stands, so I have the following proposals:

• We agree to remain in the Canary Islands until we have a unanimous vote to move on, or
• You, or other parties, buy out my 50% share as detailed below, or
• I buy you both out as detailed below

As to a buy-out, I suggest that this is calculated as follows:
• A 25% share is based on the price of £X on the last day of February 2008, less 5% PA
• All subscriptions are then to be equalised, including the flight costs of any "maintenance only" trips in the last year
• An allowance of the full cost of any “boat presents” less 5% PA is repaid, or they are returned - as decided by the new owner(s)

 

[Talulah]

As an alternative your first letter could asks for their suggestions as to how the buy out could be done.
This could work in your favour if their proposal is better than yours.
If they come up with something worse than your proposal you then put forward and alternative.
At the end of the discussions you are then happy if you come to a compromise near your suggested withdrawal above.

 

[nigelmercier]

Am I right in thinking that the vast majority of "maintainance only" trips and "boat presents" were from yourself?

I have certainly spent the most and been on the most maintenance trips, but the other active partner is a close second.

 

[Sailfree]

Unless there is a large sum involved in maintenance costs/travel I would forget it.

I value the 25% share at £x and i offer this for your share or you can buy my 2x 25% share at the same equivalent price

 

[LadyInBed]

The arrangement is that even though I own 50%, we split the expenses three ways.

The first partner now has no money, and seems to have given up on the idea; the second partner wants to move away from the Canary Islands after only a year. We recently had a vote where the first partner abstained, so the status quo holds and we stay;

Is there a status quo, with one abstention and a 50% / 25% vote?

 

[nigelmercier]

Is there a status quo, with one abstention and a 50% / 25% vote?

I agree, but we all pay 1/3 of the costs each, so I guess I only have one vote.

 

[Talulah]

A friend of ours had a 1/3 share in a Sun Odyssey 40.
Two wanted out so they decided to sell up. (One divorced, the other moved away.)
Our friend offered to buy them out at £18k each (£54k in total). They declined as they wanted £20k each. (£60k total.)
The boat was advertised at £67k and sat on the hard at the brokers for six months. The price was reduced.
Six months later after very little interest, and having to pay for being ashore, less brokerage fees they finally accepted an offer and got £15k each.

 

[LadyInBed]

I agree, but we all pay 1/3 of the costs each, so I guess I only have one vote.

I would have thought that 50% ownership trumps 33% costs.
Is your one third - one vote a moral point of view or is it written in the T's & C's?

 

[fireball]

Bottom line - it's easier to achieve your aim with the agreement of the other parties than without.

The OP clearly wants to stay in the Canary Islands whilst one of the others wants to move on. That's not the only sticking point - clearly the other partners either have a lack of desire or lack of funds to improve the vessel in the same way as the OP.

Choices are to continue with the partnership or not. It is sensible to revisit the aims of the partnership from time to time and have a frank & open discussion about it. I'm not sure if an email/letter would be the best way to start it though - I think it would be better to have it at a round table meeting - over a pint/meal and try to keep it a friendly discussion.

It isn't easy balancing the requirements and desires of all parties so there must be compromise - and then you come to the issue of who should compromise the most ... and possibly that shouldn't be the OP who has greatest financial interest in the boat.

 

[benjenbav]

I bought a 25% share in a 2000 built Bavaria 47 in 2005. In 2008 two of the other 25% shareholders wanted to withdraw - they thought they were going to make money! The remaining partner and I persuaded a friend to buy a 25% share at £X (which was the 2005 share price less 10% PA). We couldn't find a fourth partner, so I bought a second 25% share, also at £X. The arrangement is that even though I own 50%, we split the expenses three ways.

The first partner now has no money, and seems to have given up on the idea; the second partner wants to move away from the Canary Islands after only a year. We recently had a vote where the first partner abstained, so the status quo holds and we stay; however, I am fed up with having to do battle. It isn't only this, I want to make improvements, but they get blocked. You get the idea.

I am currently considering my options, and plan to send the following to my boat partners; what do you think? Please don't discuss actual figures in this thread.


Although I think the Canary Islands are the perfect location, for all the reasons given previously, it is inevitable that one day we will all have seen enough of them. But this time is a long way off, certainly not in the next couple of years. We haven’t even explored the options of being based in the other western islands. Having doubts about our long-term situation is un-stabilising and disruptive to future plans. I therefore feel that I am unable to continue in our partnership as it stands, so I have the following proposals:

• We agree to remain in the Canary Islands until we have a unanimous vote to move on, or
• You, or other parties, buy out my 50% share as detailed below, or
• I buy you both out as detailed below

As to a buy-out, I suggest that this is calculated as follows:
• A 25% share is based on the price of £X on the last day of February 2008, less 5% PA
• All subscriptions are then to be equalised, including the flight costs of any "maintenance only" trips in the last year
• An allowance of the full cost of any “boat presents” less 5% PA is repaid, or they are returned - as decided by the new owner(s)

If you and your partners agree on a way forward you can pretty much do what you like. The difficulty is where you don't agree on something: what are the rules for sorting it out, or getting out of the arrangements? The starting point has to be to determine what the contract between you provides for. If there's a written contract then it ought to deal with the resolution of differences; the golden rule of entering into any contract being to set the ground rules for an eventual exit. If the contract has been varied by susequent agreements then those need to be taken into account.

If, as sounds likely, there isn't a written contract, then there will still be a contract between the partners but it will be the devil's own job to work out exactly what its terms might be. In that case, the practical solution will be to try to find something on which everyone can agree based on a buy-out of one or other or a sale of the yacht and a division of the proceeds.

It's probably no comfort but I have a not dissimilar situation involving various family members, some jointly owned assets and disparite aspirations for what to do with them. We have a trust deed which governs ownership but it doesn't really help that much because no-one feels sufficiently inclined to alienate siblings in order to get their own way and so we move forwards, year after year with a thin veneer of goodwill over the top of a vat of bubbling resentment. Hey ho

 

[KenMcCulloch]

Our boat share agreement provides for such a situation by rules which essentially require the boat to be offered for sale on the open market if there is failure to agree. It also explicitly permits any partner then to buy the boat at the current market value or of course a new syndicate to form. Your situation is not enviable and points up the importance of a proper syndicate agreement.

 

[skyflyer]

if its any help this is the wording from our agreement - it seems a fair way of dealing with it

DISPOSAL of SHARE

1. Each partner is beneficial owner of the proportion of the capital value of the yacht as stated above, plus the maintenance fund (less outstanding payments) and is free to give, bequeath or sell this share. The disposee shall be subject to all the conditions of this agreement and become a registered skipper prior to commencing any use of the yacht
2. The remaining partners reserve the right to vet prospective incoming partners but may only refuse transfer on reasonable grounds. This could include – but is not limited to - lack of sailing experience or an intention or desire to use the yacht in a way that was incompatible with the usage patterns of the existing shareholders.
3. The remaining partners reserve the right to have first refusal on the purchase of the share for sale at a market value. If the partners are unable to agree a market value after a period of not less than 14 days then the partner wishing to sell his share shall be deemed to have given the remaining partners first refusal and shall then be free to place the share on the open market. The share may not be sold to a third party at a value equal to or less than that last offered by an existing partner without that partner being given the opportunity to buy at the same price.

 

[wadget]

Might want to consider the fact that you have what seems to be your real name as your username discussing this on one of the most read sailing forums. could be awkward if your co owners saw this before you speak to them.

 

[Lakesailor]

Or could work in his favour if they are planning to be unreasonable on the values.

Suggesting partnership rules at this stage is not really relevant. They have to work with what they have.
I have never held out for unrealistic figures when selling things. Perhaps I could have got a little more here or there, but tales of greedy people taking thumping losses (below what had already been offered) are the norm.

Partnerships are a nightmare in my experience. Even a perfectly amicable business partnership ended up with me paying all the tax on one occasion. I would rather do without than be in a partnership again.