Hi there,
I am in the process of trying to sell my online web design business. I have been approached w/ many different proposals but this one has me liking it. I will be able to stay on with the business while getting help with it at the same time to grow it. - my main reason for selling is that I don't have the time anymore.
How does a 50% partnership on a business work? (specifically that of an online business). Net revenue was $54,000 last year and I have heard responses from people that because I am the business, they are not sure revenue can sustain at that rate.
Does the person who wants 50% buy into the business for one lump sum? How is this sum calculated? Is it paid out annually or just once?
This is how it was worded to me:
They would buy an agreed percentage of the business based on expected PROFIT
based on past trends of monthly income. The revenue for each job would be
split 3 ways - 1. The Admin side of the job, dealing with client
communications etc. (15%), 2. The design/development work (60%), 3. Profit
(25%).
Example: If we were 50% partners and we got 3 jobs in one month totaling
$4.5k. If I were busy with the family but still had a bit of time to deal
with the admin side of the 3 jobs but not do the actual jobs and they did
these. The breakdown would be...
Me (CURRENT OWNER): $675 (15% of the total for admin work) + $562.50 (50% of the profit)
= $1237.50
Them (PROSPECTIVE BUYER): $2700 (60% for design work) + $562.50 (50% of the profit) = $3262.50
The benefits of this are that there is guaranteed income from the profit
based on your percentage stake in the business as well as being rewarded
for the amount of time you can invest (Salary). All the percentages etc.
can be changed to something both parties agree on.
How would the total buy in be calculated? I'm pretty confused as to how this whole thing works.
What kind of contract would be needed? Lawyer?
THANKYOU in advance!
I am in the process of trying to sell my online web design business. I have been approached w/ many different proposals but this one has me liking it. I will be able to stay on with the business while getting help with it at the same time to grow it. - my main reason for selling is that I don't have the time anymore.
How does a 50% partnership on a business work? (specifically that of an online business). Net revenue was $54,000 last year and I have heard responses from people that because I am the business, they are not sure revenue can sustain at that rate.
Does the person who wants 50% buy into the business for one lump sum? How is this sum calculated? Is it paid out annually or just once?
This is how it was worded to me:
They would buy an agreed percentage of the business based on expected PROFIT
based on past trends of monthly income. The revenue for each job would be
split 3 ways - 1. The Admin side of the job, dealing with client
communications etc. (15%), 2. The design/development work (60%), 3. Profit
(25%).
Example: If we were 50% partners and we got 3 jobs in one month totaling
$4.5k. If I were busy with the family but still had a bit of time to deal
with the admin side of the 3 jobs but not do the actual jobs and they did
these. The breakdown would be...
Me (CURRENT OWNER): $675 (15% of the total for admin work) + $562.50 (50% of the profit)
= $1237.50
Them (PROSPECTIVE BUYER): $2700 (60% for design work) + $562.50 (50% of the profit) = $3262.50
The benefits of this are that there is guaranteed income from the profit
based on your percentage stake in the business as well as being rewarded
for the amount of time you can invest (Salary). All the percentages etc.
can be changed to something both parties agree on.
How would the total buy in be calculated? I'm pretty confused as to how this whole thing works.
What kind of contract would be needed? Lawyer?
THANKYOU in advance!