Questions

What are the general profit sharing rules that resonate well for long term relationship?

I am planning for partnership to expand my business. What would be a ideal deal?

2answers

Hi, I've helped people buy and sell businesses for years and have helped people dissolve and create partnerships and raise capital.

When you take on a partner, you're selling a piece of a business. Either the one you have now or the one you hope to grow into.

The question is, 'what do you expect your new partner to bring to the business and what will they need to get in order to justify the risks?'

People use the word 'partner' to talk about real partners, shareholders, investors, etc. You can structure debt arrangements, equity arrangements or combinations depending on what you want to achieve and based on what inticements you think you need to offer.

Give me a call to discuss the specifics of your situation and be sure to check out my reviews to see how I've helped other people with partner issues.

Thanks

Dave


Answered 2 years ago

Profit sharing should be on the basis of:
1. Skills
2. Experience
3. Contribution to the idea
4. Contribution in the execution
5. Potential Contribution in (a) revenue and (b) traction
6. Initial investment
7. Future scope of investment
8. Industry relationships
9. Partnerships
10. Duties accepted & future duties/responsibilities
11. Degree of risk
12. Sacrifice for the business
13. Balancing factors
14. Happiness Quotient
15. Success Quotient
16. IQ
17. EQ
18. Science & Technology Quotient
19. Key Drivers (Secret Sauce)
20. Moral ratings

My team have developed a formula for finding out the right percentage of share to be allotted to each member. You may setup a call so that I can take up input and suggest the appropriate percentage.

Thanks
Shishir


Answered 2 years ago

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