Seeking Advice: minority investor wants out and business can’t afford it. How should they be repaid?

An investor put up 25% of the purchase price and investment into an existing business (total 40k) and made a few small loans (6k, 5k, 3.5k) and now, somewhat suddenly, wants out. There was a partnership agreement but the specifics of such an occurrence wasn't as clearly defined as it should have been. I'm struggling with deciding how to deal with this and how this person should be repaid.

The agreement at the time of purchase was that this minority stakeholder would help with getting the business activity in order for the first couple years (accounting, marketing, budget and pricing, sales), as well as provide general strategic advice. After systems were in place they would become a silent partner, still provide some strategic advice, and continue to be an equity holder. They also had an equal vote in ongoing business decisions. I would be responsible for operational aspects of the business and take control of the management of his responsibilities once

It's now 2 years into it and things have gone a little slower than anticipated. The investor did help get a new website done and with business registration/taxes but didn't do much with other things. From the beginning I still did all of the marketing and budgeting/accounting. It always seemed this project was a low priority for them and now they are deciding it isn't something they want to be a part of.

I don't know how to value the buy-back of their equity and it would be a strain on the business in the short term to aggressively repay the loans. From my perspective, they are prematurely leaving an investment that is worth the same or less than what it was at the time of purchase. I'm trying to not be resentful or emotional about it but I also want to be fair with how I negotiate with them. Any advice?


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