Engineering Partnerships

[hvac1701]

I’m considering going into business with a partner. Does anyone know how ownership in a typical MEP firm would work with one mechanical and one electrical partner? If we only worked on the same jobs, mechanical would represent 60% of the typical fee. Does that make 60% ownership fair? Once the business got going though you would hire more mechanical guys than electrical and maybe this would even out the money situation, but with only two P.E.’s the mechanical would also carry 60% of the liability. I would appreciate any opinions on the subject.

 

[ajack1]

Would the electrical engineer only do 40% of the work or would they do the same amount of work but be more involved in generating orders and all the other aspects of running a business?

However you decide to go I would strongly recommend getting a partners agreement drawn up before you start out.

 

[GregLamberson]

hvac1701

I agree with ajack1, but to expand a little. What you need to do is a very unbiased assessment of the skills you each bring to the table (apart from the engineering side). Assuming you are not going to hire a business manager, admin asst, marketing, etc.

Only part of the work will be actual engineering, the business side of it will need to be addressed.

Only after sitting down and talking through the overall management and running of the business can you decide what the percentage splits will be.

Greg Lamberson, BS, MBA
Consultant - Upstream Energy
Website:

http://www.oil-gas-consulting.com

 

[ajack1]

Also worth considering who puts in what amount of money to start the company? Would that also be a 60-40 or a 50-50 split, any loans you take out in the early days will also probably need securing against individuals rather than the company, what is the split on that?

I would give this some serious thought.

 

[lz5pl]

hvac1701, it is very difficult to split exactly responsibilities and profits in engineering business. I know it from my experience. We are two partners, both engineers, but my partner is dealing mostly with management and commercial activities and I do engineering. My obligations include design and commissioning - the latest connected with long trips and stay far from family, often in not so good living conditions. With some good selling my partner can contribute more profit/per working hour than me. My work sometimes is more difficult and needs more engineering expertize than his. How to evaluate everybody's contribution? For me it is not possible, so we keep our 50/50 percentage and each one just is doing his best for the company.
I am not sure whether my experience could help you, as such things are also matter of national culture and I am not sure it is applicable to you. Just my 50 cents...

http://www.triel.bg

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It may be like this in theory and practice, but in real life it is completely different.
The favourite sentence of my army sergeant

 

[hvac1701]

Thank you for all the advice.