Structure for partnership

3 Replies

How would you structure a 50/50 partnership if one person did the managing and finding of partnership and the other was just equity?

Next how would you structure a 0/100 partnership if i the 0 did the managing, finding the deal, etc.? The one specific is the equity investor would like tax write offs....

Partnerships are nice because they can bring investment capitol, but not so nice when there are other opinions in the organization. A 50/50 partnership can get deadlocked and lead to at best hard feelings and at worst lawsuits. You should consider a 49/51 split or have some buyout scheme in your agreement. Be sure to outline in writing exactly what each partner's duty's are.

I can't see why it would be beneficial to the 0 to do a 0/100 partnership. That would make the 0 an employee with contractual obligation to work but no financial interest. Doing the managing and finding the deal are very important and the deal wouldn't happen without them. Similarly, the equity member is necessary as the deal wouldn't happen without the financing. If the deal-finder's level of experience is low then his/her ownership might be low in order to entice the equity partner to invest. As the deal-finder gains more experience then he/she can demand more equity in the deal.

yes sorry, what i ment by the 0/100 was the 0 had no money into the deal. I was thinking a 30% stake would be in the ball park since i do have experience and a track record of always have units full and have good margins and cash flows....