My boss has recently told me that he has to declare bankruptcy due to a massive client who never paid. He is offering me partner status in the next company and I could really use some outside advice. I’m 20, in college, and planned on going into sales. My business on the side hasn’t had any traction for a while due to my lack of connections, but my boss has consistently had work for my company since his network is huge. He’s s offering ownership in a new company which will have the services I offer, with his connections, as well as all of his contracts from the previous company, which is well into six-figures. I’d be bringing skills and labor to the table. He’d be bringing that, plus connections and current contracts/relationships.
Where do I start? This seems like a great opportunity but throws a wrench in my other plans. Any outside opinions, and questions are welcomed! I’ve never faced something like this and have no clue where to start.
On the surface, my immediate thought is that nobody in the situation you describe your boss as being in needs to offer 40% startup equity to a 20 year-old unless he’s planning to exploit that to some extent. As others have mentioned, it’s highly probable that he’s going to expect you to do 100% of the work for 40% share, and/or shelter this new entity from his bankruptcy situation by having it be a partnership.
A savvy lawyer could put something in the operating agreement to protect you well or even benefit from your boss’s shares being seized in bankruptcy, but it’s a risky thing either way.