Joint Venture Payment Terms - Asshole terms or Is this Common Practice

Octaviano's picture
Rank: Baboon | 125

Have an asset that isn't being utilized so am exploring terms w/ operators that can create a potentially profitable business w/ this asset. We would be passive shareholders they would do all the operating.

Asset would be transferred to a NewCo. which would then sell 60% of shares to the operators.

Payment terms are 1/3 Downpayment at the signing of the contract. But then here's the part that I'm not getting, they want to pay the remaining 2/3 as an advancement of my share of future dividends.

I was taken aback by this proposal, shouldn't payment come from their share of dividends? Why should payment of 60% of my asset come from my future earnings? Considering not partnering w/ these guys.

Am I exaggerating or is this more common than I think.

Comments (1)

  • Associate 3 in PE - Other
Jan 23, 2020
    • 1