Professional Documents
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Case No. 6 Black Jack Antiques
Case No. 6 Black Jack Antiques
Nathaniel H. Chan
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Black-Jack Antiques
Jeremy Black and Kevin Jack has been officemates for their state’s transportation
department. Although Kevin is much older than Jeremy, they have developed a strong friendship
through the years. They have also discovered a common love for antique furniture, Jeremy for
restoration and Kevin for collecting. Together with their respective wives, Jenny and Susan, they
would frequent estate sales and antique stores. They also began talking of the possibility of
becoming business partners someday and opening up their own antique furniture sales and
restoration shop. This talk became reality six years ago when they left their jobs and opened
Black-Jack Antiques: Furniture and Restoration. They started the partnership without any
business plan and formal partnership agreement. Because of Jeremy’s huge personal debt and
low credit score, Kevin took start-up loans for the business under his personal name. In return,
Jeremy’s construction skills and supply contacts saved the pair several thousand dollars in
renovations to the building. His reputation and client list from previous restoration works also
provided the business a solid base of clients and referrals. They saw this as a win-win situation
and they did not bother anymore to ascertain as to whom between them invested more in the
business. The business grew steadily through the years with Kevin, a detail-oriented, business
savvy person, overseeing the sales and business side, and Jeremy, focusing on the restoration of
furniture. Jeremy’s growing family and his mounting personal debt led Kevin to offer financial
help to him on two occasions and despite Jeremy’s substantial stress in his personal life, he did
not let this affect his work. The partners’ wives have also developed a strong friendship as they
would often meet for lunch, shopping and other activities. In one of their latest conversations,
Jenny told Susan that Jeremy might soon have a job in a nearby furniture design firm and he was
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thinking that maybe they could sell the store or Kevin can buy out his “part” of the business.
Kevin was shock to hear this and instead of immediately confronting Jeremy, he decided to talk
to his father-in-law, “Coach” Ed Morgan. After explaining the situation to Coach, he expressed
commitment to his friendship and partnership to Jeremy. He was concerned that Jeremy might
be making the wrong decision on leaving the partnership because of fear. He also expressed his
apprehensions that the antique side of the business may not be enough for it to survive if Jeremy
leaves. Furthermore, he does not know how to split the profit from the possible sale because he
made the major financial investment. He was also afraid that at his age, he might not find a job
anymore. After hearing Kevin, Coach posed the question “What should a friend and business
partner do?” This was a wake-up call for him and that night he and Susan discussed their options
and how to proceed. Acknowledging that the lack of written agreement was a problem, Kevin
wanted to know what Jeremy was feeling for him to look for a job elsewhere. They also
discussed the strengths and potential of the antique side of the business and Kevin’s own
strengths and options in the future. These considerations are very important as Kevin thinks
The lack of a business plan and a formal partnership agreement are the main problems in
this case. In any start-up business, careful planning is essential. A business plan, which is a
document that specifies the details of the business prior to its opening, will help the
entrepreneurs identify the potential issues and problems accompanying a particular business
responsibilities and resource contribution as well as what expertise they will bring to the table.
In the case of Black-Jack Antiques, Kevin and Jeremy started the endeavor without these two
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important documents and instead relied on their strong friendship and their individual expertise
to jumpstart the business. The lack of a business plan forced Kevin to take a start-up loan under
his name instead of finding potential investors or venture capitalists to finance the business.
Since their partnership was based on friendship and mutual trust, they did not even consider
crafting a formal partnership agreement which could have protected the legal and economic
interests of both parties. Kevin failed to foresee the implications of a break-up in the partnership
which a formal partnership agreement would have considered. This ambiguity in the terms of the
partnership may also be the reason for Jeremy’s decision to leave the partnership. Since Kevin
was the one who invested more financially in the business, Jeremy must have thought that he has
lesser share in the partnership. This must have made him feel less financially secure especially
The objective in this case is for Kevin to address the problem by talking to Jeremy on the
future direction of the partnership. Kevin must present to Jeremy the advantages and
disadvantages of all the alternative courses of actions that they can take depending on whether
Jeremy decides to stay or to leave the partnership . Kevin should also try to know and understand
the reasons why Jeremy is contemplating on leaving the partnership. This way, they can have an
honest conversation and come up with a “win-win” solution to the problem. This will hopefully
keep the friendship and at the same time protect the interest of both partners.
The first alternate course of action that Kevin can take is to talk to Jeremy to convince
him to stay in the partnership. He should first elicit the reasons for Jeremy’s plan of leaving the
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partnership so he can understand Jeremy better. Although the case does not explicitly say how
transparent Kevin has been with Jeremy regarding the financial situation of the business, there is
a great possibility that Jeremy’s lack of information on this matter is one of the reasons for his
decision. Jeremy might feel that the growth of the company through the years has not translated
positively to his personal life with his ongoing financial woes. Jeremy might also feel that his
hard work in the restoration side of the business has not been compensated well enough. If Kevin
is able to assure Jeremy that they can thresh out Jeremy’s concerns for him to stay in the
business, it is best that they draft and sign a formal partnership agreement that will protect the
interests of both parties. This agreement should explicitly state the individual responsibilities of
the partners as well as the ownership structure and the profit sharing scheme. The business
should also compensate the technical prowess of Jeremy for every restoration job he performs as
well as recognize the managerial skills of Kevin by giving him a monthly salary. The contract
should also clearly express possible exit strategies that a partner can take if one wants out in the
future.
If Kevin will not be able to persuade Jeremy to continue with the partnership, he can
pursue two other alternative actions; he can buy-out the shares of Jeremy or they can sell the
business to a third party. If Kevin decides to buy-out the shares of Jeremy, the challenge is how
to put value on the partners’ individual shares in the business. Before Kevin can buy Jeremy out,
they should first hire an accountant to conduct a thorough audit and valuation of the assets of the
partnership. This process will help them divide the business equitably and prevent
misunderstanding and hurt feelings. The advantage of this alternate course of action for Kevin is
he will have full ownership and control of the business. He can bring it to whatever direction he
wants without consulting anyone. However, there are some questions that Kevin needs to
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answer before deciding on this choice. First, does he have enough money to buy Jeremy out?
Will the antique side of the business be able to sustain it? These questions can be answered by
careful business planning which he must do before deciding to take this option. If his money is
not enough, the option is either to take another loan or arrange a comfortable payment scheme
with Jeremy to pay off his shares in a longer period of time. If the business plan says that the
business cannot be sustained with the antique side alone, he can talk to the furniture design firm
where Jeremy will be working if they can arrange a possible tie-up or joint venture for the
restoration part of the business. He can even ask Jeremy to work for him part-time on week-ends
His last option is to agree with Jeremy to sell the business to a third party. This decision
will still entail careful valuation of the partnership’s assets so that equitable distribution of the
profit can be done after the sale. Kevin will also face a lot of challenges with this decision.
There is no certainty of the time frame that they can sell the business. While waiting for a buyer,
there is a distinct possibility of the business operating at a loss without the restoration side.
Second, Kevin’s age is a drawback in getting himself a job once they have already sold the
business. If Kevin will have difficulty in finding work after the sale, the profit that he will make
from the sale of the business may not sustain him in the long run.
Conclusion
In conclusion, the most viable alternative course of action for Kevin to take is to convince
Jeremy to change his mind of leaving the partnership. Since the business is already past its start-
up stage and is probably on its survival or early success stage, the hard work that the partners
have put into the business may go to naught if they separate. The skills sets of Kevin and Jeremy
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complement each other and their individual contributions are essential for the survival of the
business. Therefore, it is best for them to stick together and help the business grow to resource
maturity. Since they failed to make a business plan and formal partnership agreement at the start
of the business, they must do it right this time to avoid destroying the friendship and ensure the
long-term survival of the partnership. If Jeremy will be honest enough to tell Kevin the reasons
why he was thinking of leaving the partnership, they might be able to thresh out matters and
come up with solutions to solve Jeremy’s financial problems. The other alternative courses of
action are full of uncertainty especially regarding Kevin’s future. If he decides to buy Jeremy
out, there is no assurance of the future success of the business. If he decides together with
Jeremy to sell the business, the specter of joblessness looms large for Kevin. Both actions also
do not guarantee that Kevin and Jeremy’s friendship can be maintained. The process that they
will undergo in either the buy-out or the sale may become acrimonious that they may even end
up as bitter enemies. Kevin must therefore go back to the question of “Coach” Ed, “What should
a friend and business partner do?” The best answer is for Kevin to do his best to save both the
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