Partnership and Profit sharing

HummadHummad Posts: 2subscriber Member
edited September 2017 in Business Planning
I'm working on a project of management consultancy with my friend in Dubai. I'm going to invest almost 100% of the capital in the business. My friend, based in Dubai, is willing to become partner solely on the basis that he has a huge list of companies (about 600) that he's been serving during his previous employment which he's confident he will bring to our business (since his other company is closing), run the business and draw a monthly working allowance (salary) as well. Can he really become a partner in profit sharing? If so, what percentage of profit sharing should be? I'm based in the UK and I'll be looking after some of the tasks related to international affairs, like sorting out certification and accreditation with professional bodies in the UK etc.

Answers

  • Ryan O'BlenessRyan O'Bleness Birmingham, Mich. Posts: 1,017administrator Site Admin
    edited September 2017
    Hi, @Hummad. I guess I am a little bit confused on the situation. Is he putting any money into the company himself, or is he working for equity? 

    Here is a good article about pros and cons related to profit sharing: 
    https://www.thebalance.com/profit-sharing-1918230
    Ryan O'Bleness
    Community Manager
    StartupNation, LLC
  • HummadHummad Posts: 2subscriber Member
    He is not putting any money AND earning salary as working allowance. The only reason he has to become partner are THOSE 600 companies which he's claiming to get them under our new company, get them to sign up. Now, since they are not legally bound or with him, there's no surety whether he will successfully bring any, partly or all of the companies to us. Since there's a huge amount of uncertainty, I find it unreasonable to make him a partner.
  • Ryan O'BlenessRyan O'Bleness Birmingham, Mich. Posts: 1,017administrator Site Admin
    Oh, very interesting. I can definitely see why you feel that way, and I probably would have the same line of thinking if I were in you situation. Good luck with whichever decision you make. 
    Ryan O'Bleness
    Community Manager
    StartupNation, LLC
  • contentcouplecontentcouple Posts: 11subscriber Bronze Level Member
    And is it possible to find such list in some other way? Maybe you just should to build it yourself OR find another partner who has experience in it.

    I had a partner once. I had knowledge and experience and he had... AN IDEA (I was young and stupid). He promissed he will work hard to gain experience but he didn't. Since then I am sceptical to all those partnerships where one of partners offers something uncertain. You will be risking your money and work hard not to lose it and the partner risks almost nothing - and cares less. That's how I see it.
  • saravanansaravanan Posts: 389subscriber Silver Level Member
    Profit sharing can be on partnerships. But, profit sharing does not mean you have to be a partner. Profit sharing can be with an employee. That means you need not be a financial investor. The company expects you to invest your skills and hard work.

    In partnership , a partner can or cannot invest financially. It all depends on the agreement. But partners are a certain percentage of owner of that company. Need not be equal in every case.
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