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June07_guy

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I'm setting up a small financial consulting shop, and I'm thinking along the following lines:

1) Required capital is $1 million.
2) I'll split this into 1000 shares, each worth $1000.
3) I'll own 500 shares, and get paid $25k annually as token salary for managing the company.
4) Only two partners are sought, each paying $500k each, so each gets 250 shares at a price of $2000 per share (they get 50% and I get 50%).
5) My 500 shares are basically paid for by the partners.

So what i'm trying to do is own 50% of the company without paying anything. The partners have accepted this arrangement as they believe in the concept and in my ability to run it.

Should I go on? Please, only serious replies as I am pressed to make a decision soon. I have made a full business plan, projections, etc, I'm just wondering if there are other arrangements i should consider.
 
your future partners gave you $1MM and you are asking a CFA forum business advice????
 
What's your investing mandate? In other words, what's your platform?

I would love to see your projections.

Why so indecisive - this is a home run for you.....if you actually know what you're doing.
 
Are you putting up your money or just starting company with the capital pumped in by your partners?

Not to threadjack, but what would you do if you are joining a kind of startup company which is still to generate real topline? I mean how much premium would you pay to buy the equity given you are also bringing your experience and management skills on the table. Same situation, how much premium is justified if you just brining money on the table?

Thanks.
 
To further clarify, there would be no financial consulting shop if I don't set it up, and they like the idea. They also have their own connections, so to speak, or at least they feel they do anyway, which they would use (legally of course) to grow the business.

Nothing comes for free, i would have to quit my current job immediately! That means over $200k net foregone annually, so it isn't an easy decsion to make. The money will be used to set up the place and hire some "expensive" consultants. I am 47 by the way. I just want to hear from those who have done something similar to see whether I could structure this differently.
 
I'd stick with the 200k net/yr. You would need to hit a 40% return to make that amount for yourself as 50% owner of the firm, and thats before any opex(assuming your 25k salary is eaten up with other costs of doing biz).

Or better yet open it up, get the 50% ownership, dump it immediately and cash out the 500k they gave you as owner, then go back to your job...now that is an short-term investment strategy if i have ever heard of one
 
It all depends on how successful the business is. If you are confident about its future and you don't have the money to start it on your own, then may be this is the right thing to do. I have seen some consulting shops take on $2MM+ deals rather quickly.
 
$0 down, $25K salary, 50% stake in something that maybe worth something. Do it!! However, in the parternship agreement, anything about what will happen if the ventur fail? Are you going to be personally financial liable for the failed business?



Edited 1 time(s). Last edit at Friday, December 5, 2008 at 04:54PM by ws.
 
MFE Wrote:
-------------------------------------------------------
> your future partners gave you $1MM and you are
> asking a CFA forum business advice????


LOL!
 
June07_guy Wrote:
-------------------------------------------------------
> I'm setting up a small financial consulting shop,
> and I'm thinking along the following lines:
>
> 1) Required capital is $1 million.
> 2) I'll split this into 1000 shares, each worth
> $1000.
> 3) I'll own 500 shares, and get paid $25k annually
> as token salary for managing the company.
> 4) Only two partners are sought, each paying $500k
> each, so each gets 250 shares at a price of $2000
> per share (they get 50% and I get 50%).
> 5) My 500 shares are basically paid for by the
> partners.
>
> So what i'm trying to do is own 50% of the company
> without paying anything. The partners have
> accepted this arrangement as they believe in the
> concept and in my ability to run it.
>
> Should I go on? Please, only serious replies as I
> am pressed to make a decision soon. I have made a
> full business plan, projections, etc, I'm just
> wondering if there are other arrangements i should
> consider.


lawyer.
 
June07_guy got all < 50% on CFA Level 1, the second time he took it. Seriously, you can check it.

I'm just trying to think who is messing around with that screen name.
 
Here you go...LOLZ.

Re: June 08ers- Official Results Thread
Posted by: June07_guy (IP Logged) [hide posts from this user]
Date: July 29, 2008 09:31AM

Level 1: Fail

The table below illustrates your subject matter strengths and weaknesses. The three columns on the right are marked with asterisks to indicate your performance on each question or topic area.


Multiple Choice
Q# Topic Max Pts <=50% 51%-70% >70%
- Alternative Investments 8 * - -
- Corporate Finance 20 * - -
- Derivatives 12 * - -
- Economics 24 * - -
- Equity Investments 24 * - -
- Ethical & Professional Standards 36 * - -
- Financial Statement Analysis 48 * - -
- Fixed Income Investments 28 * - -
- Portfolio Management 12 * - -
- Quantitative Methods 28 * - -



Edited 1 time(s). Last edit at Friday, December 5, 2008 at 08:50PM by sublimity.
 
I wonder if his partners know about (Sept. 26 - S&P closes at 1216):

June07_guy Wrote:
-------------------------------------------------------
> Yes, I feel it in my bones! Hoof, this could have
> been a major disaster for the U.S. financial
> system, but it's over, with only a few banks going
> under and things returning firmly under control.
> The last few weeks will go down in history as some
> of the most grim in U.S. economic history, and the
> greatest bargain hunting expeditions of all time!
>
>
> The magnitude of the crisis has been way
> overblown, with fear mostly driving things down.
> Start buying distressed securities of all kinds
> starting today (Friday) or Monday morning. I feel
> good already. Good luck.
 
In addition to June07_guy, a few others are hilarious fakers such as:

MBAFinance and squirrel.master.

Keep up the good work guys, I've been laughing at your previous posts using the search function.
 
sublimity Wrote:
-------------------------------------------------------
> In addition to June07_guy, a few others are
> hilarious fakers such as:
>
> MBAFinance and squirrel.master.
>
> Keep up the good work guys, I've been laughing at
> your previous posts using the search function.

:)
 
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