Evaluating Partnership Offer from Construction Company?
Hello,
I have been asked if I am interested in becoming a partner at the construction firm where I work. Three percent of the employees are partners. I have not had to evaluate this kind of opportunity before and am seeking advice on who in the financial ecosystem is best suited to provide consulting services that would help me study this opportunity.
Should I reach out to a financial advisor, accountant, business formation lawyer? My first thought is someone who evaluates the financial health of companies regularly to determine the appropriate valuation...I think that's an investment banker? I'm a construction guy..so all the finance titles sound similar.
Looking for some guidance. Let me know if another forum would be more appropriate.
Thank you
Ps. Saw the other recent post about partnership offer in development and figured the RE forum would be most appropriate for the question above.
Based on the most helpful WSO content, here are some insights on who you might consider reaching out to for evaluating a partnership offer from a construction company:
Financial Advisor:
Accountant (CPA):
Business Formation Lawyer:
Investment Banker:
Recommendations:
Additional Resources:
If you need more specific advice or resources, you might want to explore the WSO forums further or consider professional consulting services tailored to your needs.
Sources: Should I reach out to future SA employer?, Financial advisor vs investment banker, Consulting=money suck?, How various professionals see the world, Fintech is going to kill Private Wealth Management jobs?
No you don't need a financial advisor. If it is like most companies in civil/construction engineering then partnership means you are a share holder and buy into the company with the hopes of profit sharing in the future. I find it to be pretty similar to dividends and stocks.
Few questions that should tell you if this is a good idea:
1. Pipeline of work
2. Talk with other current partners and figure out their thoughts, comps etc
3. Ask for financial statements, focus on income statement and balance sheet to get a snapshot of how the firm is doing
4. Ask about the firms growth and future business strategy
5. Look around what other firms are offering and negotiate smartly
6. Hire a lawyer for paperwork and negotiation, there are plenty of lawyers who do sole work of advising people on this matter
Don't take it the wrong way but you are now a partner. That means you are more than a construction guy and need to have a basic understanding of finance, it's very easy to learn the basics and that's all you need. Good luck
@CRE patrick_bateman_ thebrofessor
Any thoughts/guidance on my post above? Any questions I should be asking as I go through the process?
I gave the comment above this one a SB. It’s good advice.
Financially, I think you have been given pretty solid advice already. Are they asking you to purchase shares of the company directly, or are they giving you an option to purchase the shares on loan (or through future bonuses, some other way of vesting)? Is the amount they are asking you to invest feel like an amount that would affect your living situation if it didn't pan out?
The other part of the equation is professional growth - is this a company you see yourself being with for a long time? Partnership may be your only option to break into those higher roles in the company. I know many firms I've worked with in the past had it as a requisite for further promotions.
While it sounds like you are a high performer or integral part of the firm, partnership may give some downside protection as well. During layoffs/downsizing, you are very unlikely to be removed as an owner in the company. It is also a double-edge sword; you are now an owner in a company that's not doing well.
Sounds like you are in a great position regardless of what you choose to do. Keep up the good work!
Thank you for your thoughts. You bring up some very good points to think through.
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