Ep. 117 — Michael Dash: The Six-Year Lawsuit Hiding in Your Operating Agreement

5 min read

Subscribe: Apple Podcasts · Spotify · YouTube · Amazon Music · iHeartRadio · Pandora · RSS

Episode Summary

You and your partner own 50/50. The agreement got drafted by her husband. There’s no real shotgun, no real valuation mechanic, no real plan for the day one of you wants to grow and the other wants to coast. It feels fine until it doesn’t. Then one of you decides to buy the other out, and inside six months the deal you thought you closed turns into a six-year lawsuit and a million dollars in legal fees. That’s where Michael Dash found himself after buying out his partner at Parallel HR Solutions. I had Michael on because almost every owner I talk to has either lived this or is one bad week away from it, and almost nobody has the documents, the math, or the emotional discipline to handle it well. We got into how the buyout actually went down, why he turned down a settlement that would have ended it years earlier, the two people you should never take legal advice from (his lawyers and his dad), and the moment in Bali where he realized the lawsuit was costing him more than money. He ended up selling the company to his best friend and writing the entire sale check to attorneys. He sounds lighter for it.

Watch on YouTube

## Top 10 Takeaways
  1. Your operating agreement is the most important document you’ll never read again until the day you desperately need it.
  2. A 50/50 split with no work-effort clause becomes a fight the moment one partner wants to grow and the other wants to coast.
  3. Pricing the buyout on a number, not on revenue retention, transfers all the post-close risk to the buyer.
  4. The two people not to ask for advice in a lawsuit are your lawyers and your parents. Both are biased.
  5. Every email from your attorney is a trigger. Build a 48-hour rule before you respond.
  6. Emotional decisions extend disputes. Strategic decisions end them.
  7. Settlement math almost always beats winning math once attorney fees compound past year two.
  8. You cannot lead a company you’ve started to hate. Your team feels it before you admit it.
  9. The smallest change you can make today is the one that compounds into a different life in two years.
  10. Know why you’re doing this. Without that, every hard decision becomes ego versus ego.

Sound Bites

“It was very awkward and it was not a good time. It was very tense. And it was also very juvenile, I think, of both of us. And I certainly made a lot of mistakes that I would handle differently if I could go back in time.” (@TBD) — Michael Dash

“There are two people not to ask for advice when you’re in a lawsuit. One are the actual lawyers. Your parents. Because your parents have a bias to protect their children.” (@TBD) — Michael Dash

“I had a worse experience with my attorneys than I did suing my partner.” (@TBD) — Michael Dash

“Nothing good happens on text message. Nothing good happens making an emotional decision. You have to be able to identify your trigger points.” (@TBD) — Michael Dash

“The only person that wins in that situation are the attorneys, because there’s too much emotional sunk costs into this where people will just do whatever it takes to win.” (@TBD) — Ryan Tansom

About This Episode

Michael Dash is the former co-owner of Parallel HR Solutions, a finance and tech staffing firm he built to roughly $5.5M in revenue with offices in Salt Lake City, Idaho, and Nasik, India. After buying out his 51% partner, he found himself in a six-year lawsuit that cost upwards of $1M in legal fees and ended with him selling the company to his best friend (the same friend who’d originally pulled him into staffing) to fund the settlement. Michael is now writing a book called Chasing the High about his entrepreneurial path, addiction recovery, and the lessons he wishes he’d learned earlier. He’s also a co-founder of the Activated movement.

Resources Mentioned

  • Activated — Movement co-founded with Parveen and Joey around five core principles (positivity, authenticity, passion, empathy, resilience).
  • Chasing the High by Michael Dash — Michael’s upcoming book on entrepreneurship, addiction, and lessons learned.
  • Michael G Dash — Michael’s site for book updates. — michaelgdash.com
  • Thrive Global — Arianna Huffington’s publication where Michael writes the FATE (From Addict To Entrepreneur) interview series.
  • Ignite Journeys — Humanitarian trips for executive teams.
  • The School of Greatness with Lewis Howes — Podcast Michael cited as part of his shift away from numbing media.
  • Eat That Frog by Brian Tracy — Referenced by Ryan on tackling the highest-leverage thing first.
  • YEC (Young Entrepreneur Council) — Where Ryan and Michael originally met.

Connections

Phase + Module:

Milestones:

Concepts referenced:

Graph View