Combining two companies

[matt25738]

Need some help, my company is looking to bring in a landscape architect into the picture. Our goal is to combine his company and ours so that it benefits everyone involved. Here's the basic outline of whats up:
- He would help find leads, design the projects, and make the sales
- Estimates would be a collaborated effort
- We would be responsible for doing the installs and managing subs that are brought on.
- Marketing efforts would be shared as well as leads
- We would be responsible from a license and insurance side of things
- Profits of the job would be distributed 3 ways (3 owners).

I've got to sit down and figure out how to structure this thing. Any advice on how to approach compensation for both parties involved??

[KS_Grasscutter]

Pay each person a wage based on the time they put in, at market value for their position. At the end of the year divide profit equally among owners. I guess for that to work all business assets would have to be owned equally.
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[KrayzKajun]

How about you use him/his company as a sub for designs.
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[MJ Services]

hire him as an employee with a low salary then do a profit sharing or bonus system on top of that? I like the idea of just subbing him out and maybe you can give him a commission for any leads he finds that lands you work. I'd do something like this for a year or so to see if it'll work before rolling things in to one. It'll be much harder to split one company up if things don't work.

[White Gardens]

Originally Posted by MJ Services

hire him as an employee with a low salary then do a profit sharing or bonus system on top of that? I like the idea of just subbing him out and maybe you can give him a commission for any leads he finds that lands you work. I'd do something like this for a year or so to see if it'll work before rolling things in to one. It'll be much harder to split one company up if things don't work.

Agreed on this. I wouldn't use him as a partner, but as an employee with profit sharing so that he gets paid more like an owner without him actually being one.

Partnerships rarely work out, but to make an employee accountable for the amount of profit coming is a nice balance.

Dave Ramsey has some great advice about this subject. Even when multiple people want to start a business together, he advises to put the business in one persons name, and let the other take a profit share.


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[Will P.C.]

Originally Posted by White Gardens

Agreed on this. I wouldn't use him as a partner, but as an employee with profit sharing so that he gets paid more like an owner without him actually being one.

Partnerships rarely work out, but to make an employee accountable for the amount of profit coming is a nice balance.

Dave Ramsey has some great advice about this subject. Even when multiple people want to start a business together, he advises to put the business in one persons name, and let the other take a profit share.


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Big time Dave Ramsey fan.

Consider this. If things went south, would he be able to walk away the next day without much loss compared to you who is paying or payed for everything and has assets your are stuck with? So consider his risk in the company when you are deciding to cut a check.

[matt25738]

Thanks everyone, this has been a pretty enlightening. As far as determing a salary for him, would you do it based off a basic sales rep's salary or go as far as making him a supervisor since I'd like to turn over the estimating to him, with my company having the final say so on the bid.