Partnership Opportunity
Partnership Opportunity
(OP)
I've been out beating the bushes to get some new work.....and a chance conversation between me and a former employer resulted in him discussing him retiring and me buying into the company. (Essentially taking his place.) I was intrigued....but he wants the buy out money all at once. I feel that is a little risky and I'd rather structure it as him getting a percentage of my salary. (My worry is clients staying after he is gone.)
Is that how you would do it?
Is that how you would do it?





RE: Partnership Opportunity
I think the risk of clients leaving depends on the industry and size of clients. Is he working for small residential contractors or big international conglomerates?
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The name is a long story -- just call me Lo.
RE: Partnership Opportunity
I know of a Building Services consultancy with a good reputation, that was acquired by one of the multinational engineering firms. The day the 'must stay with company' clause expired, they all walked out and started their own enterprise again. I'd imagine they made quite a bit of money out of it too.
EDMS Australia
RE: Partnership Opportunity
A transition period sounds reasonable, as that provides some level of continuity. My wife bought out an existing practice without any transition, but luckily, she was able to retain the bulk of the patients and picked up news in the meantime.
TTFN (ta ta for now)
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RE: Partnership Opportunity
I don't know if he is going to hang around for that long......but it would help.
Medium sized industrial clients.
RE: Partnership Opportunity
I knew I wasn't prepared to run it all on my own on day 1 without the former owner there to show me where the landmines are.
STF
RE: Partnership Opportunity
Years ago I discussed buying out a senior partner but it never materialized. I struggled with the thought that clients would be now coming to me for my knowledge (consultant) and no longer the retired engineer I was to buy out.
RE: Partnership Opportunity
That's an excellent way to keep the current owner personally invested in the business until the transition is over. And a good litmus test that the current owner isn't bailing out because he knows it ISN'T profitable any more!
STF
RE: Partnership Opportunity
Cheers
Greg Locock
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RE: Partnership Opportunity
RE: Partnership Opportunity
RE: Partnership Opportunity
Ultimately, I would talk to an attorney, with experience in this area, before making any decisions. I've learned they know a lot of things we do not and understand language much better leading to stronger contracts.
Pamela K. Quillin, P.E.
Quillin Engineering, LLC
NSPE-CO, Central Chapter
Dinner program: http://nspe-co.org/events.php
RE: Partnership Opportunity
I have a friend who had a 20 man firm at one point, and eventually, by the end, it was just him as people retired or moved on. He was unable to sell the business for anything as he wanted out at time of sale, but there was nothing more than "goodwill" from his name.
That is one of the concerns for those of us that are single or couple man operations. The business generally can't run without the main guys in place, so with them gone, the value is very limited.
Travis Mack
MFP Design, LLC
www.mfpdesign.com
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RE: Partnership Opportunity