Whil Hentzen (Pro*) wrote: >> One-third = cash payable monthly NET 30 >> Two-thirds = convertible, unsecured 90-day note at Prime + 3% >> >> Each 90 days, client will pay interest due and roll note over for >> another 90 days or offer the choice of the following options >> >> - payment in full of all principal and interest due >> - conversion to equity at the rate of $XXk owed = 1 % equity (or fraction >> thereof) >> > > So you're asking two questions... should you do this at all, and if so, > are the terms reasonable. > > Door #2 sounds like a very bad idea. Being a minority shareholder is the > worst of all possible worlds. It's like having a part share in a condo > that's located in another city that you never travel to. > > "Supposedly" you can later sell your share.... but to who? And at what > price? Not easy to do. Some would say impossible. You're at the mercy of > the majority owners. Even if they mean well, circumstances may well > prevent them from doing right by you. And you have no practical recourse. > > The 1/3 now means you are getting some cash in your pocket, plus a tiny > bit of extra (vis-a-vis interest). If you've got the spare time, and > have a good gut feeling, it's kind of like sweat equity. > > The prime + 3% doesn't seem particularly generous; I bet if you went to > a local bank and asked for a non-secured loan, they'd want more than 3%. > > As far as 'should you do this at all' part, what's your gut say? After > 40 yrs in the biz, gramps, your gut is pretty wise. >
Spoken like a true pro. Thanks for those comments, Whil (even though this wasn't my thread). I appreciated the perspective, anyway. (And Ted isn't in the biz THAT long, is he? I figured him for late 40s in age?? If that's the case, boy, he started early! <g>) -- Michael J. Babcock, MCP MB Software Solutions, LLC http://mbsoftwaresolutions.com http://fabmate.com "Work smarter, not harder, with MBSS custom software solutions!" _______________________________________________ Post Messages to: ProFox@leafe.com Subscription Maintenance: http://leafe.com/mailman/listinfo/profox OT-free version of this list: http://leafe.com/mailman/listinfo/profoxtech ** All postings, unless explicitly stated otherwise, are the opinions of the author, and do not constitute legal or medical advice. This statement is added to the messages for those lawyers who are too stupid to see the obvious.
