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My wife and I are buying an existing insurance company. We have the experience in the business and are going to run it and build it up. The existing owner is retiring and has worked the business much. We have a silent investor who will provide the money to purchase the business. He doesn't want us to make payments to pay him back, he just wants to be an investor. How should the ownership % be divided up?
Your post is just a bit broad to get any useful feedback.
Answer this question - what are you comfortable giving up in terms of ownership given that this investor is putting up the money and you have no financial risk? You don't say how much of the purchase price he (she) is putting up.
Tikibarman,
Congratulations on connecting with someone who wants to help you buy the business.
As far as how much ownership the investor should get in return for his investment, that would depend upon several factors. You say he doesn't want payments but you didn't say how he expects to realize the benefit (return) on his investment. That could be a key factor in deciding how to structure your arrangement.
As you three discuss the details of your agreement - do remember that ownership (equity) is only one part of the equation. You should also discuss:
1. Control - how "strategy" decisions will be made and how the operational decisions will be made.
2. Results - how will the results be distributed
3. Compensation - If you are working at the business, how will you be compensated for your efforts
Hope this helps. I realize this is a general answer, so if you want to discuss the specifics of your situation- feel free to drop me a PM or contact me directly.
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