Ownership % for start up
Three partners are in the process of buying a company. We are going to buy for $140k. We are trying to find a fair way to allocate ownership interest? Numbers below don’t add up to 140k but we will figure that out...the below is just initial discussion.
Partner 1 - Founder an expert in the industry. Will bring substantial accounts in the first 12 months (25% revenue growth) and will be making day to day decisions. Will not be putting up any cash up front. Will be accountable for capital investments etc going forward but not contributing to initial purchase. He will not be drawing a salary for role but will be covering hours and approving decisions made by salaried GM. Lives right next door. It`s already agreed all decisions will go through him. Partner 2 - Does not know the industry and just wants to invest money as an "angel" type of investor. He does not want any involvement but he is willing to help during start up stages and put effort from time to time. Lives close and will cover here and there when in a bind. His initial recommendation is to put 25% of the $140k for 25% ownership. Partner 3 - Does not know the industry but highly educated and willing to learn the business. Willing to put about 20 hours a week. Will do his part. Currently employed and will not leave for this business but willing to invest and be a part time strategic partner. Good connections and may be able to get additional business. He is willing to put up $50k for a TBD ownership %. Lives out of state. We would like your recommendation of ownership % for each of the owners based on the above. Partner 1 is driving the ship and is the one who got partner 2 and 3 involved and ready to invest. It is importatnt to note without partner 1 thisdies. Partners 2 and 3 can be replaceable and capital can be gathered elsewhere but that is not something we want.
afs245/11/2009 7:18 PM
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