how do you do? (this is really not related to myself but its a curiosity)

f.eg. if you and your partner (living in different continents) started your hosting business 1 year ago:

you used to make exactly 50% of everything, of the server rent and of the income (no office, no pencil, no pc, no phone expences, no employee!)... how would you do if your partner wants to leave and sell you its share?

how much would you give to your leaving partner? how much is apropriate and fair for both?

to make the calculation easier, lets say that the business brings in exactly $1300 per month and that the server expences are $300 per month and therefore every partner earns $500 per month...

thanks for this
:stickout

Well, for that small of a company i'd say 1/2 of it would be worth no more than $6,000 at most.

you would really give your partner $6,000? your partner would need ($6,000 / $500) one year to get that money.

is 1 year of income of the partner an usual calculation in hosting terms?

It should have been in the partnership agreement. If it's not, I'd talk to a lawyer (but that's just me).

Well, that's the general fair market value evaluation. You take your yearly revenue, minus expenses, and if its a small company that's your rough estimate of company value.

For larger companies you can include assets such as servers, office buildings and equipment, also if its a very well publicly known company then you place the multiple factor in, depending on age in business, amount of signups per month, growth, and profit/loss numbers its generally anywhere from yearly income X 1.5 to 2.5 = company value.

Also allera is correct, this should have all been discussed and written up before you started the company but since your asking I'm going to assume your a sole proprietorship company which means technically whomever's name is on that business license owns 100% of it.

Also, it wouldn't be a bad idea to invlove a lawyer, however, if it is indded a sole proprietorship under your name then technically all you would need to do is pay him the fair market value without any paperwork, unless of course there was some other paperwork regarding the company being split in half to each owner which if again it was a sole proprietorship its not really legally binding...

But in short yes, 6000 would be my best estimate for a fair market value.

I'd make him pay me to start doing his half of the work.