Equity distribution when taking investor / partner to develop a successful existing business


2

i am the sole shareholder of a well-established service business with 10-years of expertise and recognition in our industry locally.
We have an opportunity to grow by creating multiple new locations.
The total investment requires $300K.
In the new Business Plan , we included the hiring a full-time of key managers under salary: Marketing/Sales/webmasters/locations managers/
As the founder, i remain the general manager (CEO)- Active and i know by experience i wont be able to handle the extra work by myself

Reading through many answers/ questions on this (great) blog, am still a bit uncertain of the various options possible:

Quest 1 : if taking an investor, do i have to offer them Equity or can just give them a Profit option until he get repaid ?

Quest 2 : I may have a possible partner who can bring the money ( from the investors as he gets direct access to them).Should i offer him Equity , Salary , or part of the NOI? considering that he is not investing his own money, nor he will be an active partner, more a " business consultant , or possible funding source " let's say ?

Partner Equity Investors

asked Sep 4 '12 at 04:13
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Christopher
11 points

1 Answer


1

Question 1: There are a variety of options. Traditional equity, convertible notes, revenue based financing (I'd look in to this one if I were you), and others. There's also the possibility of just getting a bank loan which would be the cheapest form of money.

Question 2: I would probably just look at paying some sort of finder's fee if all the person is doing is bringing in the money. I wouldn't offer salary or equity unless he was actually coming on full time.

answered Sep 7 '12 at 00:32
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