I'm a self-funded searcher looking at a $2M deal that is 90% SBA financeable and I would split the 10% equity infusion with a passive investor, with us each writing $100k checks. She has not funded any of my search costs and would be a completely passive investor in the deal, with me running the company as new CEO. Curious if anyone has been in a similar situation and how you went about dividing up the common equity?
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Outside of that, you can structure the equity component however you think is fair. Just be aware that anyone who owns 20% or more of the business under an SBA structure would be required to guarantee the debt. Just because they put up 50% of the equity it does not mean they have to own 50% of the company. You can give them any amount of ownership interest, even down to 5% to 19% if you so choose. You are taking on the largest risk with the personal guarantee and the responsibility of managing the company, and that is deemed too have additional value from an ownership perspective. Lastly, you can set it up where from an ownership perspective they only have say 10%, but they then can get a higher return.
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