Current owner wants out, parties are interested in co-ownership. The things that I see most necessary is you need to fine comb through the books with an accountant. Besides your confidence that you can turn this business around, you do need to create a concrete business plan to show that operations can continue and what will be changed, and then also develop continencies for probabilistic events. The sale should be done with a purchase agreement and an attorney to shore up weaknesses and liabilities. Cutoff of things and indemnification lines should be drawn and explicitly written out. Get disclosures of anything that could be open liabilty, have a discovery period where you investigate everything.

The co-owners need to have an operating agreement. Have roles clearly defined. Going into business with someone is a huge commitment and requires you to essentially be married per se. You will be chained to each other for nearly ever. The percentage of ownership very much matters for legal reasons, tax reasons, etc. Do not go into business with anyone that you wouldn’t trust with your personal bank account access. And even if you do, build walls. LLC the crap out of this. There is no solid rule for this, but a small business should have ease of access to capital for a year of business at least.

GOOD LUCK

Whats your percentage?

How much will you be in control of operations?

Will they be on-site or silent or a bit of both?

Ask yourself if you could be around that person all the time? Half of it is about the relationship.

You need a lawyer to draw up this kind of contract. It’ll seem expensive, but co-owner or partnership situations are almost always bad and cause constant disputes and issues. I’ve done it and I would never do it again.

If you must, your contract will need to address ownership terms, how profits are split, when profits are split (when is a big deal because net profit from one day to another changes wildly depending on when you’re restocking inventory, processing payroll, making large annual payments like insurance, encountering maintenance issues, etc.). It will also need to spell out how partners can voluntarily exit, how their shares are valued, the terms of paying them out, and how those sold shares are split among the remaining partners. It should also spell out how partners can be involuntarily exited for not fulfilling their obligations as partners (and it will need to state what those obligations are) - inevitably one partner is going to want to freeride on the efforts of the other partners. I really advise against partnership, you’re not going to be the exception to the nearly universal examples of partnerships going to hell. If you want to do this, I encourage you to try to figure out a way to do it just yourself.

As far as valuing the existing business, you’ll need to review the profit and loss statements and balance sheet to get an idea of the health of the business. What are the outstanding debts (are you taking those over or are you buying assets)? Are there any off-the-books revenue or expenses (paying employees under the table, making unreported cash sales, etc. - this is all very common stuff) that distort the picture of the “official” profit and loss statements. If in a leased space, does the lease even allow for ownership transfer to you within the existing lease? What are your obligations under the lease (often, tenants are expected to handle some level of HVAC maintenance, may have to pay for common area maintenance, may have to pay for property taxes, etc.). Are there any vendor exclusivity agreements? Also, you’ll have to transfer utilities into the new business entity which will require deposits that are way, way more than you think it will be (likely multiple thousands).

Do y’all have an idea of how you can make it work since he can’t? If you buy in how long will it take you to recoup? What are you getting in the sale? How long is the lease? What happens if one of the parties wants to sell their portion in a year? There’s a few for ya.

Are you sure you want this burden? Here are a ton of questions you should consider

Financial Questions

What is the asking price for the business? This is obviously a crucial question to start with. Be sure to get a detailed breakdown of the asking price, including the value of the assets, goodwill, and any other intangible assets.

What are the business’s annual revenues and profits? This will give you an idea of the business’s financial health and its potential for future growth.

What is the business’s debt load? This will help you assess the business’s financial risk and determine how much you can afford to invest.

What are the business’s cash flow projections? This will give you a better understanding of the business’s short-term and long-term financial viability.

Operational Questions

What are the business’s core products or services? This will help you understand the business’s target market and its competitive landscape.

What are the business’s key strengths and weaknesses? This will help you identify areas where the business can improve and potential areas of risk.

What are the business’s current and future growth plans? This will help you assess whether the business’s vision aligns with your own.

What are the business’s key relationships with suppliers, customers, and partners? This will help you understand the business’s reliance on external factors.

Management and Personnel Questions

What is the current management team’s experience and qualifications? This will help you assess the business’s ability to execute its plans.

What is the current employee turnover rate? This could indicate potential problems with employee morale or retention.

What are the current employee benefits and compensation packages? This will help you understand the business’s labor costs and its commitment to its employees.

What are the business’s plans for future hiring and growth? This will help you assess the business’s potential to create new jobs.

Legal and Regulatory Questions

What are the business’s current licenses and permits? This will help you ensure that the business is compliant with all applicable laws and regulations.

What are the business’s current legal obligations? This could include contracts, leases, or other legal agreements.

What are the business’s environmental compliance obligations? This could include permits, regulations, or remediation requirements.

First. Partners are for dancing.

Second. If you go through with it, do not, and I repeat, do not allow your partner (the wine sake importer) to make any purchasing / inventory decisions. Put it in the contract.

You must ensure that there is also no hidden debt that you aren’t aware but still had to take over yourself if there is one