Mediation Saves Business Venture and Mends Friendship

Sam and Will were close friends and jointly owned Izzy’s, a popular coffee/beer/wine cafe/music venue. The building where Izzy’s was located had been sold to a developer. Izzy’s had 1-1.5 yrs. to relocate or close. 

Sam found an attractive site nearby ready for rent but needed substantial retrofitting costs. Sam could afford it. He wanted Will to pay his share, as well as for Will to assume more management responsibilities and capital expenses. 

Will was heavily indebted and undergoing financial counseling. A full-time sales clerk, he could not keep up with his share of Izzy’s business expenses or management. An accomplished musician, he performed at Izzy’s at no cost, as well as auditioned and booked talent for the café, making it a prime musical venue. 

Sam and Will’s already strained personal and business relationships further deteriorated when a competitor made Sam an attractive offer to join him in a new partnership (LLC). The offer did not include Will. Sam liked the idea of a solvent partner with a solid business model, but was afraid to lose his friendship with Will. 

Will believed that Sam undervalued his contributions and made unreasonable demands on his time and resources. Sam acknowledged that Will was the creative heart and soul of Izzy’s, but was tired of assuming Will’s share of the management and expenses. Sam and Will agreed to a mediation session to see whether they could find a way to work successfully together and save Izzy’s.

NVMS CRS scheduled a mediation session between Sam and Will for a two hour structured and guided conversation, and resulted in the following observations.

Both Sam and Will had invested a lot money, emotion, and mental energy into starting and maintaining Izzy’s. Both valued and missed each other’s friendship. Sam was fiscally driven, responsible, and a logical decision maker. Will was the creative one who poured his energy into the music side of the business.

In the mediated agreement, Sam and Will would sell Izzy’s to the new partnership Sam created with the other investor and keep Izzy’s doors open under new management. The agreement included keeping the same name and nearby location Sam had already identified. Will would be contracted as the musical director of the new joint venture and would be paid for his work in auditioning and booking talent and performing regularly at Izzy’s. The agreement was contingent upon the agreement with the investor.

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