Going out on own with former coworker
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2 possible maybe options??....create a brand name/operating name/moto you both agree on and operate as a partnership through your corps. . ie; "The Best Consultants Group"
LLC 1 - Is yours, operating as "the best consultants group" Partner through corporation LLC 2 - Is his, operating as "the best consultants group" Partner through corporation You guys figure out the revenue/expense split
I think its common practice to operate in unison as a brand but each have your own individual LLCs. (similar to dental offices, accounting practices, etc.) representation is in the business name and something you guys can build up together.
Option 2: Create 1 OpCo "The Best consultants group Inc". Create 2 Hold Co's (one for each of you) and your respective holdcos own 100% of OpCo, (again determine your splits whether its 50/50 or 60/40 etc.)
You are employees of the OpCo, each pay yourself a reasonable salary, then dividend out excess profits into your respective HoldCo's
Just thinking out loud
Thanks, I like both these ideas. Definitely something to think about and bring up in our discussions.
Are you currently working in the same industry? You could potentially fuck both you and him over (i.e., lawsuits) if he's competing for the same business as your current firm and you're currently working for both places. Seems like a huge conflict of interest.
Good point and I should’ve mentioned. Different market and product type, so not competing with current firm at all and it’s on my free time on nights and weekends without compensation. Comp would come when I go full time.
Still have to be careful, i don't know of many companies that do not require prior approval of outside employment etc.
If it's branding you are worried about then get yourself an email address under his companies domain and label yourself a consultant to the business. I've personally worked on numerous deals where the person calling the shots had nothing to do with the business on paper but who's word was equal to that of the CEO, it seems common enough. I honestly don't know where that leaves you with power of signatory though for low key items such as NDAs etc.
Lots of room to get fucked over. 1) your current employer - would they be ok with this? Doesn't matter if you are working for free - there is a huge fucking conflict, even if it's not "the same product" - it's real estate and you work in real estate, that's enough of a conflict 2) no contract with the dude, "on a deal by deal basis" - he is 15 year your senior. Do you know exactly what type of equity he has in mind? You might be thinking 60 to yourself and 40 to him if you bring a deal. He might be thinking 10 for you 90 for himself.
It's a bit raw as I just left a partnership where the equity split my partner had in mind was so far removed from what I was thinking that it just was not even worth discussing. Get everything in writing, talk about it ahead of time and get it in writing, in writing in writing in writing. I was cool about it and spent a few months of my time "working for free" - I had already left my gig as I wanted to set up on my own. But I wasted a lot of precious months, at some point if I still don't have anything off the ground in 6 months after I left my job people will wonder wtf is wrong with me.
Stop working for free until it's clear what the position is. Discuss and put everything on paper today - it will avoid any unpleasant discussions later and large falling out.
I am about to do 2 JVs with two different acquaintances. I am putting a JV agreement now, even if we don't have a deal. One of my partner was a bit surprised as we have known each over for a long time - I told him I do not want either of us to get fucked over. He is still currently working and I have left my job - in this case I could fuck him over more, but I want to get everything done in writing.
LLC etc... Doesn't matter. Just get your agreement done and then the actual structure is easy enough to figure out. Have one common company with a clear mandate of what it will do and how things will be set up - and then have your company be a shareholder of that company. Limitations etc... Fuck it am tired - figure it out
Everything. In. Writing. Can't comment on the structure as I've not undergone something like this. Operating Agreements could be amended later (I suppose) but this agreement should be the document to fall back on whenever a big decision needs to be made.
Example: Partner A wants to sell his share to "Joe" but Partner B hates "Joe" and they do not get along. What does the Operating Agreement say about this? These situations will arise more often than you think.
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