Re: Buy-in to Business

All great questions! All negotiation points. I am in your area and have experience in business law. I would suggest you consult with both an attorney and an accountant to discuss your plans. You don't mention what type of business, but indicate a partnership. For instance, would it be better to create a new LLC if you have concerns about the company's debts? Have you examined the books? One approach might be to determine what you are comfortable doing and come up with a "deal point letter" as an offer for the business. Also, if your business and the other person do different things and you simply rent space, is this really a good deal?

What are the expected cash flows? Your agreement should anticipate what happens if you get down the road and want out. Not only look at the entrance strategy, but also the exist stategy issues.

Re: Buy-in to Business

The buy-in scenario is not out of line, but as with most business deals, "the law" does not compel a particular formula; it's whatever a party's negotiating skill is able to achieve. Also, in partnerships, absent an express agreement, losses are shared the same way as profits. Here again, the parties are free to negotiate different terms. Partnership law only dictates the default provisions if and when the partners didn't make a non-standard agreement.

Re: Buy-in to Business

Mr. Whipple is correct - technically speaking, your questions are business, not legal, ones. And in general, you should not get involved with a general partnership - you should form an entity instead (C corp., S. corp, LLC).