Podcast Breakups. What to do?
Here’s the scenario:
You start a podcast. Get a couple episodes in, and then you bring on your friend to help out, co-host with you, and take some of the workload. Maybe you’re planning and producing the content, and they’re cohosting and handling the editing and show notes.
Maybe you’ve formed an LLC and you’re both named as members. Or maybe you’ve skipped that step, and you’re just flying by the seats of your paqnts
And everything is going pretty well. Your audience is growing. You’re monetizing (or not), you’ve got tens of thousands of followers on social media, nice download numbers, and things are looking up.
But something happens.
Maybe it’s a disagreement about money.
Maybe it’s about the direction of the show.
Maybe it’s about one of the people involved not feeling valued.
Maybe it’s something that outsiders would consider totally stupid.
It doesn’t matter. You got into i. The friendship is burned… smouldering on what used to be the common ground between you.
So…now, one or both of you wants OUT.
What do you do?
First, let’s get you armed with a bit of basic business law knowledge.
When two or more people come together to “do business” (and for this discussion podcasting IS “doing business”), those people are considered partners. Almost every jurisdiction will have a default Partnership Act that addresses this. And, if you’ve been smart about it, you might even have a written partnership agreement that outlines what to do in various situations.
When partners break up, the partnership is said to be “dissolved”.
Dissolving a partnership involves gathering all of the assets and selling them off, settling all outstanding debts and accounts, and then distributing what’s left (if any) to the partners in proportion to their ownership interests.
If there’s a written partnership agreement, it might include a buy/sell provision, which would allow for a partner to continue the business by buying out the other’s interest. There are a number of ways this can work, and I’ll discuss that in a few moments.
But what if you’ve formed an LLC or a corporation?
Well, it’s basically the same scenario: If you’ve got a formal, written operating agreement, read it carefully. What does it say about “Withdrawal (or Removal) of a member and/or manager”? What does it say about the members’ interests and how they get calculated and dealt with? What does it say about buying out a departing member’s interest?
If you’ve got it in writing, the procedure is all laid out there for you. Follow it, and you’re good. Document the process carefully, make sure the correct papers get signed, payments made, etc.
(I know I’ve made this sound pretty simple, but you probably WILL need a lawyer to help make sure it’s all done right).
But what if you don’t have a formal, written operating agreement that lays this stuff out?
Well, most State LLC laws have a set of default provisions in place to deal with that eventuality. So, that’s where you look for your answers. The good news is, it’s usually pretty consistent from state to state. Most places, if the parties can’t agree on the value of the company, there’s a mechanism to get an appraisal (or multiple appraisals), which are then used to establish the buy/sell price for the company.
Now in either of these situations, it’s easier on everybody if they can come to an agreement on how to end their relationship and move on. But if not, a Court proceeding will become necessary. The Court will enforce the terms of the written agreement, or the applicable statute. There’ll be lawyers, depositions, accountants, witnesses, hearings, and ultimately, it’s unlikely anyone will be really happy with the outcome.
So, if you’re facing a breakup,
- Try to talk it through. - Whether aimed at staying together or splitting up, you’ve got to communicate.
- Get some legal advice.
- Stand up for your rights…
- Enlist the help of a skilled negotiator
- Try to be reasonable… don’t let ego get in the way of smart solutions
- Get the settlement in writing… so it’s final and binding.
- Do the steps to record/register/file with the government, so you’re out and clear of any potential risk or liability ASAP.
