View Full Version : How to setup a good argeement with financial investor?
09-12-2004, 02:19 PM
Alright. Lately i have been doing business with a very generous and wealthy CIO for a Wall Street Firm. He loves my attitude, ambition, and ideas. He is willing to invest atleast 50 grand into my business. That kind of money can push me into the big league real quick. I'd be able to take that money and easily be able to get a full scheudle of work my first real year. I know most people on this site say to stay away from partners, but this guy won't be a partner. We really did not get far into this discussion but he said he would only want a small percentage of the profits. How do i set up an agreement with him where i do not get screwed?
I know a realationship with this guy will greatly help me out when i get to the point of adding several new crews a year.
What advice can you guys give me to make sure i set up an agreement that is equally fair to both parties?
09-12-2004, 04:28 PM
You need to ask and answer several questions before going into this.
1. What does this investor stand to make out of this arrangement? How much is he going to take from the bottom line?
2. What say so will he have in the operation of the business? Is he going to be a silent investor, or will he have a say in how things are done? Not so much in how you maintain a property, but how much you charge, how much you pay, the daily business aspects, etc.
3. If he puts in 50K does that make him the majority holder? Do you have 50K in cash on hand and equipment to equal his investment? Can you come up with the needed amount to maintain even investment status?
4. With all the exposure to various businesses available to someone who has access to Wall Street, why is he interested in my company?
Then get with a good attorney and draft up the legal documents. There will be negotiations then because when you draft it up, the advantage is skewed to your side obviously. He will probably offer changes that skew the advantage back towards his side. Then the negotiations start.
09-12-2004, 04:43 PM
Just say NO to this type of an arrangement.Keep your business for your self the min you let some one else in they want to run it and give you orders on how to do things.If you wanted this type of arrangement you would be working for some one else wouldn't you???
When it comes to investing your money do it by your self, what you will find is that these people are master sales people first and care about you "not", they will sell you what they make the most commission on no matter what the out come is for you.What is the old saying jessejames used a gun they use a pen to rob you.This i know first hand as SunTrust bent me over and here it comes;0~~~~~~~~~~~~~~~~ with nothing left but too go out and dig up what i can find to work at it has been tough.Kepp you'r funds in cash locked a way for you and you only. :gunsfirin :gunsfirin payup payup
09-12-2004, 09:10 PM
I have to get futhur into detail with the guy. The guy is only willing to help me out because he likes me. I might be better off just trying to get a low interest loan from him.
09-13-2004, 12:40 PM
I might be better off just trying to get a low interest loan from him.
Good idea mrusk. Explore this option as well.
09-14-2004, 05:13 PM
how ironic, in a finance class today we were talking about planning growth. Do you realize the trouble you will get yourself into with that sort of "unplanned" growth? What does your business plan call for? Why do you want such a huge expansion?
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