I have somewhat of an unusual question. It is a business related question. Here it goes:
I have a friend that owns a company. I have been running this company for this friend now for almost 3 years (pretty much doing anything and everything). We have just created a new company where my friend pretty much invested all of the capital for this company(website - online business). My friend pay's regular monthly advertising and marketing fees to bring in business through google.
I am trying to see if I can somehow become part owner of this company. I cannot really invest a lot of capital into the company, but I can invest time. So basically, I can invest a bit of capital (I will invest more as we start growing) and I can also invest my time. My boss is worried that we will not have anyway possible to track and see if some deals and conversions have come in through my efforts. Meaning, we're not sure how to really do this as the company will end up having a stronger presence online as time goes by. So how can we calculate my time and small capital investment in helping to grow the company into what he has already done.
Somewhat of a complex situation, how would we formulate a business plan for this? Who would I talk to about this (lawyers etc...)? Any and all help is appreciated,
1 Answer from Attorneys
You don't formulate a business plan. You have a written operating, shareholder, or joint venture agreement that provides for the terms of your participation and your equity and related rights. You absolutely need a business attorney to draft the agreement as this is critical. As to your equity, I normally structure these kinds of arrangements using a dynamic equity split which means the equity amount would vary as the business progresses. This also allows for reductions in equity if things are not done. It is complicated and that is why a business attorney and a written agreement is needed. Doing business with another person without a clear agreement is always a mistake. That mistake can be catastrophic depending on what happens down the road.
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