Shares in a friend's company as a form of payment?
I have a friend who owns his own small company that manufactures some line of products. He currently owns 100% of the shares, and offered me to work with him to promote his brand (which is not successful currently), in exchange for some sort of partnership.
Basically he offered me some percentage of the total sales that will occur (for example, 25%). However, I'm not sure how to define the period of such an arrangement. I'm not looking for something that will last just a year or two, as it wouldn't lead me anywhere significant. And I don't think there's a way to state that this kind of arrangement will last "As long as the company exists".
If I'll work with him, then I want to treat it as some kind of an investment, that would have the advantages that I listed in the first paragraph, which I currently don't enjoy as an affiliate.
I also probably wouldn't want to do this type of marketing work on a constant basis (unless it would be extremely successful) - I believe that the initial work that I'll put on for the first 6 months will be the most important part, and considering that there will be positive growth by that time frame, then we can hire someone to maintain/monitor most parts.
Therefore, I suppose that the only mechanism that would allow me to enjoy the potential fruits of my work in the long-run, on a constant basis, even if I don't actively work for the company anymore, would be to own some shares in the company. So I guess we can agree to add some option that I will receive shares if the company passes a certain a threshold of sales during the first year (what should be such percentage though? I suppose 25% of shares is much less than 25% of the revenues, so should it be much more?).
But still, I'm not sure how can this guarantee that I will see money form it?
theoretically, he will still be the majority shareholder, so he can decide to not give out any dividends, and pull money from the company as his salary, for example.
Therefore I was wondering if anyone has ever been in a similar situation, and can offer some mechanism that I should pursue?
I know that at this stage is still all hypothetical, but it is obviously in my best interest to to figure this all out in advance.
80% Of These Proven Guides Are Free... ]