Advice on structuring a partnership

searcher profile

June 30, 2021

by a searcher from Boston University - Questrom School of Business in Philadelphia, PA, USA

Hello all,

I am pursuing a digital agency with a listed price of ~$1.8M via a SBA loan.

I have several investors looking to become passive partners. The investors offering to put up between $25-$100k each, meaning they would cover between 50-80% of a $180k down payment.

What are the typical structures people use in this type of scenario? Are there any good resources I should be reviewing for different options?


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commentor profile
Reply by a searcher
from University of Colorado at Boulder in Las Vegas, NV, USA
Good place to start might be a self-funded searcher structure. Couple of things you want to consider are any partners with more than 20% equity will be required to give personal guarantee on SBA debt and equity does not have to be allocated proportional to the invested capital since you will be the PG. Here are couple of post discussing the topic.

https://www.searchfunder.com/event/view/386

https://www.searchfunder.com/post/self-funded-vs-traditional-searcher-returns
commentor profile
Reply by a searcher
from Universidad Panamericana in Guadalajara, Jalisco, Mexico
From the top of my head, I would say an LLC with a very clear operation agreement or a corporation and a shareholders' agreement. However, I don't want to sound over-lawyerly, but I think it depends. Is their investment going to be in equity or a loan? If in equity, they are expecting to have preferencial rights? Instead of looking into typical structures, I prefer tailor made agreements.
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