Partnership into a company

If you were really the guy who made the phone ring, you would probably decline the offer and start your own company, otherwise your making money for other people.

Since your efforts are directly driving sales you should as for 50% of the NET profits.

When I first read this headline I thought of transforming from a partnership into a company.

Here's the thing....

I did just that and had to involve my ex when we split and my business went from a partnership into a company....about a decade ago,

Advice I can offer is to seek legal advice when an offer like what you are presented with is on the table.

Private companies are usually founded with a set number of shares and are bound by the laws in your jurisdiction.

If you are asked to partnership in a company you need to get good advice and ensure you actually get some shares in the entity.

Those shares need to have some value,,,some voting rights...something tangible.

All I can say is be careful and seek professional advice before you commit to anything......

Also be careful about your exposure to liabilities...

I could add more....but you situation and local laws are different to mine so getting good advice (and protection) for your situation is vital.

I am going to guess that today the company is worth little thus the reason the person is making the offer. I get this a few times per week. Make me a bunch of money and I will give you back some of it lol

If it's a legit company really worth money with real cash revenue and resale value that you could take to the bank, you will almost never be offered a piece of it.

If someone offers you a piece of nothing in exchange for your money and efforts then they have no skin in the game. That means they won't care if it works or take you seriously.

I found a fast way to weed out the duds. Guy comes and says lets be partners and share the profits. I say no problem I will put in my time, money and resources but to match my effort I need a 25 to 50k retainer so that you have skin in the game. If this flops I lose my investment and you lose yours.

Suddenly the person disappears lol

Now that is not to say that I have not done deals like this successfully, getting a piece of the action and revenue share but they are few and far between. Most of the time the business is in trouble for good reason and keeping the existing owner in the picture would be a disaster. At other time I could just easily spend some capital or bring in partners I already know and trust and duplicate what they have.

As far as how much to ask for, I guess I did not really answer that as there is no perfect answer unless you want to be like Mr. Wonderful off of shark tank and have your knee jerk response be 51% ;-)

I would personally ask for 50% of the sales if I am honest with you, being that you are the person 'making the phone ring' and technically bringing in the sales then that sounds fair to me.

If they have spent time developing their own product, they have technically put their skin in the game even though it may not be direct cash. Before accepting I would to a market research to see how the product fits, as well as what your unique value proposition would be. Next, as suggested, I would seek legal advice. Third, I would ask for equity equal to 50% or more, and a high % of the sales at first until you have recouped your investment. Then the % of sales you be reduced.