How to Structure an Investment Partnership
Hello everyone,
Looking for a starting point on how to structure a partnership. We have the targeted deal ready, ran our figures, and about to move forward, however, not sure how to structure this so we are both covered. We intend to find an attorney to aide us in establishing clear roles and responsibilities as well as financial benefits, which we plan to do (if anyone knows or recommends someone please comment their information below).
What are some of the goals, roles and responsibilities, and other items we should have set in place? Does anyone have a template or guide they could share? Any help is appreciated.
Most Popular Reply
In the process of trying to build a similar structure/partnership.
I would consider forming your entity(LLC, etc.) if you have not already done so, then spelling out the responsibilities and ownership percentiles of the deal in an operating agreement for this specific project.
I think the more you can get completed prior to bringing it to the attorney, the better for obvious rea$on$. We are considering having equity positions laid out as the first position for repayment, then the sweat equity as the waterfall position for any profits that exceed payback of principal and expected or acceptable rate of return(TBD).
In other words, the first position will be repaid principal + 6-12% ROI, then all would share in any waterfall to varying degrees that will depend on responsibility and sweat equity they may have in the project.
That is our approach anyway....