Someone wanted to invest 30k into my landscape company for 5% return, now I’m not the smartest guy out there and someone is free to correct me if I’m wrong but shouldn’t that 5% be until the loan is paid off and not until I give the company up
Again I’m very new to this so I could be looking at this horribly wrong
It’s not necessary that they would retain full control. It’s atypical but the investor could ask for a new super voting share class to be created giving them say 25 votes per share. Then the entrepreneur would keep the majority stake but lose the controlling interest. My advice: look at the term sheet Carefully! Also is your business really worth 600k given the future value of your cash flows? Make sure you get a fair deal :)
I think he is better served by hiring his own lawyer to advise him if he is given a contract drawn up the investor.
It would cost over $2k to have a lawyer review a $30k equity deal
I’m not one to get an attorney over most business matters, but selling equity is one that calls for an attorney 100% of the time.