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Buddy of mine. Don't know him super super well. Goes to

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Buddy of mine. Don't know him super super well. Goes to the same church as I do. Was best friends with his younger brother in elementary school. Won $50k at the casino.

Wants to buy a business, but he doesn't have like... any on-paper income. I have some because I am a business owner. He wants me to go in with him on purchasing a company with a $200k loan from a bank, using my income and his $50k as a down payment.

What % ownership should I be given for basically putting my income on the line as collateral against the success of the business?

I'm not going to get into teh specifics, but the business is something I believe is a good idea, and would invest my own money if I had some to invest, but I don't really have the reserves to make too much of an investment. I'll probably throw $10k in myself. But my name name on the loan is what's bringing value to the table here.
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well if its a 200k loan, he puts down 50k, you basically take the risk of 150k so give him 25% you take 75% and then once you make back your money renegotiate.
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>>2984475
That sounds pretty reckless. Have you done your homework on this business?

And what kind of business has an intrinsic value of 200k? That points to an annual revenue of give or take 100k, which sounds like its staff can't be much more than a couple people, meaning the risk that if any quit, it could be catastrophic with respect to the value of the operation.

The exception to this is if they're selling some sort of stellar product/service that is irreplaceable enough where staff doesn't matter so much - but then, you must ask once again why the business would only be worth 200k.

Now, if it's a restaurant or bar, you might consider going ahead with it, but it would be a very good idea to understand both the nature of that kind of business as well as the market it's situated in.

Don't make leaps of faith with private equity, particularly which you can't really afford, that's the bottom line. Leveraged investing is pants-on-head retarded.
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someone once told me not to do business with a friend
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>>2984475
>Christian
>Casino

They don't go well together anon. What do we learn about fast money in the bible?

One proverb states: “An inheritance obtained first by greed will not be a blessing in the end.” (Proverbs 20:21) Problem gambling has plunged addicts into debt or even bankruptcy and has cost many of them jobs, marriages, and friendships. Applying the Bible’s guiding principles can help a person avoid the negative effects that gambling can have on life and happiness.

I'd do the following - say that you are open to the principle of it, but will need to spend time understanding the business plan.

Speak to a church elder, ask if he would be willing to speak to you about the idea and then only go ahead if your friend agrees to a meeting with all 3 of you.

dont go ahead if your friend is unwilling to accept wise counsel.
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>>2984475
Don't go into business with 'buddies'
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>>2984475


what kind of shit business are you buying for 200 grand.

do you have experience in the industry????? does your friend?????????????

Are you and him putting up houses for collateral???


If you have never worked in an industry you want to start a business in, it would be less risky to light your money on fire and take up sky diving on old air planes with chutes you arent inspecting.
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>>2986215


cause the second you have to really yell at them for fuckign up, and believe me you will cause they thought this business would be a silly hobby that prints them money with no work, which is what every tard whos never started a business thinks, they wont be your friend anymore, because

You ll be the mean slave driving dick who ran them off.
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>>2984819
This

Make sure to get 75% of the business if you are responsible for 75% of the loan

Don't let him Jew you. If he tries to claim the down payment should give him more stake, remind him he is unable to get a loan by himself.
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>>2984475
Don't get into business with your friend man. Seriously I've learnt that lesson the hard way.

I partnered up with my friend and it has completely destroyed our friendship. We only talk business, it's cold and clinical as fuck. He's a manipulator and has been using company money for personal shit which is tantamount to embezzlement so I'm going for dissolution of the partnership agreement.

But it's going to be expensive and it's pretty terrifying considering how we actually make pretty great money and now it's going to be reduced to rubble. But I can't/won't be stolen from.

Anyway, even if your friend is a good guy, don't do it. Apart from that he has never held a steady job and won the startup capital gambling? Sounds like a recipe for utter disaster.
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>>2986288
Kys retarded biblefag
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The numbers and details have been changed to protect the innocent and also to make things less complicated.

The business in question is worth more than $200k, and there are more people on the line, some with, some without cash and capital. I did not want to introduce confounding variables into a simple question for /fin/. I can see I have only confused many.

He has a long solid credit history, just very little reportable income. He's taken many loans and repaid them.


>>2986367
>>2984819

I, too, cannot get the loan myself, as I do not have $50k lying around. We are both in a position of wanting to buy this business, but not being able to qualify for the loan.

There has to be some standard for this kind of partnership? I can't seem to google well enough to come up with it.

I run a successful 5 employee business with my wife. I am familiar with business, running business with friends, and what it takes to do business.

I am simply asking what it is worth to put your name as collateral.

Seems like the answer from you is 'everything'. That seems a bit aggressive to me. Seeing as how I want to be in this business, and need that $50k.
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>>2989008
Consider.

We go in with my signature and his $50k. Buy the property for $250k. It's worth $250k. Our loan is $200k.

For easy numbers lets assume no bankers fees or anything.

So now we have $50k equity, that he just put down with his $50k cash. I'm %75 owner because I took the 'risk' of this investment.

The next day we decide the business is too much of a hassel, we want to get out. Sell the business for the $250k its worth.

Now that $50k equity comes back; but because I'm %75k owner, I get $37.5k and he gets $12.5k!

That doesn't sound like a very good deal for him.
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Did he really win that money at the casino or did you make that up as well? Cuz the kind of guy who gambles with such stakes doesn't sound like the ideal business partner to me.
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>>2989259
I made that up as well, for simplicities sake. It was, however, an unexpected windfall of excess cash. And he really does write almost everything off, so he makes, on paper, something like $15k / year. He also lives a very modest life style and is very frugal.

The personalities are not what I am looking for advice on. Its the accounting.
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>>2989259
for me either
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You expect a monthly income of how much ?
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Dont do it
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>>2989008
>I run a successful 5 employee business with my wife

>successful
> can't get a loan and have no 'reserves' to invest, other than a measly $10k

topkek
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Also, won the money at a casino? Is that the best you can come up with? We are all anon here, why can't you just say he's a drug dealer?
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>>2984475
are you going to run the business with him?
(I really really hope the answer is yes otherwise u a retard)
If you're going to run the business with him ask for 50/50. if you're not going to be part of the busines and run it with him then honestly the risk is too great for anything below 30-40%
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>>2984475
Actual advise needs way way more information. Trash most of the other posts, without aditional informations it is absolutely impossible to advise you on how much you can demand or if the business is a good decision at all.

How much do you make per month?
What are your monthly obligations?
Does he have any skills to bring into the company?
And many many other questions, of which some are very personal and do not! belong on 4chan.

So my advise would be:
1st) write a solid business plan
2nd) get a professional in your field to advise you
3rd) THEN decide if it is a good idea or not.

But one advise here is actual real real good and will be most likely part of the advise of any sane and experienced professional:
>>2986304
>Don't go into business with 'buddies'

You will be buddies for another week after working together and then you will hate each other. Roughly 90% of all friendship-businesses I advised ended up like this despite me telling them this. You are either soul-mates which could marry each other if you are gay or distant enough to be on ok-ish terms after work even if you collide in some matters. Anything in between will lead to a collapse of you, your partner and/or the business.
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>>2990808
Thank you for your advice. I honestly wasn't sure if there was some standard range of compensation or what. We've put together some business plans. There is more than one business we are looking at. There is more than he and I involved here. I'm really just trying to gauge what putting my name on it is worth to the overall ownership stake. Apparently quite a lot more than I had thought.

Despite some of the childish responses by some, this has actually been a pretty productive discussion.

Just was looking for some differing points of view. What I am walking away with is "there is no standard compensation for co-borrowing, it all depends on too many factors to make a general rule".

That, and some people are more interested in yelling at you for asking a question than actually answering the question.

For what it's worth, I don't know him well enough to not want to lose the friendship over money. In fact, I don't know very many people that well . That's why I don't have any friends. Miserliness is deep in my blood.

Also, he's not a drug dealer. At least not that I know of. Again, it's just more complicated than I care to explain.
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