Hallo
I work in a wine shop that my boss would like to sell. The reason for the sale is that after 3 years he cannot pay himself a full salary on which he can live. I am also the only employee with a permanent contract. Now several parties are interested in taking over with me as co-owner. I will remain employed while retaining my current salary, etc. and at the end of the year we will divide profits. I have to partly buy myself in for that.
Well, I’m not at all familiar with these types of situations and I was wondering what important questions you should ask to your potential interested parties
Thanks

  • Certain-Entrance7839@alien.topBEnglish
    1·
    1 year ago

    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).