Buy out of Partner (mother)

Great forum. And thank you in advance for your input. I started a business with my mother over 10 years ago. Being my mother we don't have any partnership agreement. To keep it real simple she put up the capital and I put up the sweat. I have been president and operator of the company for 10 years. She has been basically a silent partner. I have gone to her from time to time for advice and she has spent a total of five days in 10 years actually contributing to the day to day operations. I have paid myself a fair salary based on my performance. Because of the economic downturn the business grew slowly but didn't show any real profit until last year, 2013. It has shown even greater profit in 2013. Neither of us have drawn any profit out. I have paid her back her entire investment plus 6% interest.



Now she wants to retire and is demanding I buy her out of the business. She wants 3.5 times profit. My stance is that I paid her back her investment. She was a silent partner and therefore is not entitled to more than her investment plus interest.



What are your thoughts?



Is it typical that a non working investor will recoup their investment, plus interest, plus half the value of the company?



I feel that because I put up the sweat and she put up the money then its a 50/50 split. I would pay her 50% value. But sense I have already paid her back her investment than I only owe her the difference between her investment and the 50% value.



Please shed some light on this. I am trying yo honor my mother but also protect my future and my children's.



Thanks so much.

via Small-Business-Forum.net http://www.small-business-forum.net/financing-your-small-business/10566-buy-out-partner-mother.html