The first thing is to establish WHY a partnership agreement is neccessary, apposed to other options.
I have generally find that the new prospective partner under values what the primary owner had already given to build its business, and often new prospective partners under-estimate what they'll get in return for being a partner. New Prospective Partners, after first year, often want out, and makes life really difficult for the primary owner. Bottom line, anyone that wants to be a partner, should earn their right to become a partner, and commit to get their feet wet in the business for a while, before having their partnerships finalized and granted. If you have a partner, and finaicial problems develop you will ahv major issue. If you ever go to Sell your company, your hands may be heavilly tied. What type of company are you? I'd recommend an S-corp or LLC over doing a legal basic partnership. It will give you more control on what rights the partner has. IS this prospective partner bringing in "cash"? You may want to consider doing a "note" instead of a legal partnership. In the terms of a NOTE, you can specifiy many things on mechanisms to pay back that note, or secure it. For example, in the note, you could promise 5% of the company stock, to be defined or allocated at some pre-defined time, event, or condition. Its not necessary to actullay define a fixed number of shares. But doing something like that avoids the hassle of recreateing a legal business structure that might limit your control. Doing it through a NOTE, just makes sure the propspective individual is compensated, without having to predict the futures. Its just like being a partner. Partnerships can work, but you give something up, that is the most valuable. It can be hard for two people to resolve a difference of opinion. To Partner, there should be a very clear justification of what the partner is bringing in of necessary value. If you need help, then its appropriate to look for it. Thats the whole underlying principle of Corporations. A "team" will be more effective than an individual. The challenging part is to find the best method to pull togeather the team. The legal "partnership" method can be risky. Your Email inferred he may be a very good candidate for a partner. I dont doubt that for a second. Step 1 is to sit down with him, and really define what you ahve put in todate, what he's willing to put in, and asses values to those things. IF you can agree to the value of those things, then its easy to establish a formula of fair compensation for each. But aftter defining those details, then you re-visit the best corporate structure to facilitate the desired partnership. SCorps only allow personal investors partners (not companies), but can be a good way to partner if teh partner has a second income generating business. They often can use losses on their personal returns to offset taxes, which can incourage the lending money to the company, and still allow some financial benefit when money is not rolling in profit. It should also be noted that private investors are usually looking at 3% interest profit if they put their money in the open market right now. Dont undersell the value of your company, as ir would likely be a better money maker to yield a return for this partner. Tom DeReggi RapidDSL & Wireless, Inc IntAirNet- Fixed Wireless Broadband ----- Original Message ----- From: "Robert West" <robert.w...@just-micro.com> To: "'WISPA General List'" <wireless@wispa.org> Sent: Thursday, October 22, 2009 11:17 AM Subject: [WISPA] Partnership Agreements > I've had as few people approach me in the recent past wanting to partner > up > with me and to be honest, I can really use someone to carry half the load. > I'm leery, however of getting screwed. (My father was in business for > years > with one partner and after they took on another they all got screwed to > the > point they were out of business) A requirement of a partner, for me, > would > be someone buying in with enough cash to grow the company to carry the > extra > weight of the new guy. The ones in the past turned out to be flakes with > only dollar signs in their eyes. Not a good fit for me, I'm not about > cash > in my pocket, that comes with doing a good job and someone talking about > money all the time scares the hell out of me. > > > > I now have a guy who looks good. Has the assets and interest. Has 3 > small > towers in parts in his barn, he has a barn converted to an office, > construction equipment, trailers, etc. He understands there won't be any > money flowing in his pocket for probably a year due to the expansion we're > doing. He says that's fine. He also has the billing and general > paperwork > experience and background. (I absolutely hate dealing with the money and > paperwork) Looks good so far. The construction equipment would be a > help, > no more begging things from farmers and making deals to get a hole dug. > His > current gig is as an electrical engineer, travels around the world as a > contractor overseeing the repair and programming of robotics as well as > the > installation of the equipment. He says he's tired of being gone all the > time and wants to stay in one area in a field that will be somewhat > related > and complicated enough that he won't get bored. Hmmmmm.. > > > > I've been to his home a few times, even put in a private wireless > connection > between him and his neighbor a mile away. Seems like a decent guy. > > > > Now he wants to sit down and work things out on paper. Any advice on > things > to cover my ass on? Things some of you wished you had down on paper when > you started out? I'm not a partner kinda guy, my business plan is always > in > my head, I make much of it up as I go along and I jump in and just do > things > myself so this is new territory. (However, my total lack of > organization > is due to the previously stated operation of the business plan) > > > > I know some will yell to not take on a partner and I'd be one of them, > believe me. That's why I've fought them off so long. But with a larger > network coming online and eyes for even more expansion, it's looking good > to > me. (We currently only have a little less than 200 subs but anticipate > twice if not 3 times that to come online in 2010) I just don't want to > be > out in the cold or screwed over due to my ability to trust. I'll never > give > up more than 50%, won't happen, but there are many ways people can screw > others. > > > > It all sounds like picking the right person for marriage. (I have a bad > track record in that too!!! ) Do ya think maybe him and I should just > kinda > "date" for awhile before we make the commitment? What would be considered > first base in this kind of thing....? Configuring a CPE after a few dates > then moving on to a customer installation then if it all goes well, take > the > plunge and climb a tower together? > > > > Weird. > > > > Thanks. > > > > Robert West > > Just Micro Digital Services Inc. > > 740-335-7020 > > > > > > -------------------------------------------------------------------------------- > WISPA Wants You! Join today! > http://signup.wispa.org/ > -------------------------------------------------------------------------------- > > WISPA Wireless List: wireless@wispa.org > > Subscribe/Unsubscribe: > http://lists.wispa.org/mailman/listinfo/wireless > > Archives: http://lists.wispa.org/pipermail/wireless/ -------------------------------------------------------------------------------- WISPA Wants You! 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