Anyone own a % share of the business they work at - need advice
August 25, 2025
by a searcher from University of Central Oklahoma in Tulsa, OK, USA
I'm talking to a company that works in the controls and automation space. After meeting with them, this is what they propose:
They will split the company. Company A is the work they are doing today at headquarters. Company B is composed of the new companies they we will acquire or startup (new locations/markets). I will buy into the Company B with a 5% stake, have a guaranteed salary and bonus, and will have opportunity for sweat equity. I will be running one of the businesses in Company B, but will be employee of the main entity, not each individual asset underneath.
My questions:
1. How have others seen re-distribution work, and what's most common? Are you requesting additional shares of stock of the Company? Is there a cap for this? Are you creating capital account, and re-investing or taking cash at will?
2. There are engineering services that would be used from Company A to support Company B's assets. The owner is looking to have a fee associated with those services to be paid by Company B, similar to a franchise. Any other better ways to do this, like direct payment for services?
3. I've only heard of sweat equity for startups. What are common sweat equity terms? Being an existing company, i don't know that they are looking to grant more shares based on time in seat, I think they'll look more toward revenue targets. Do you take a reduced salary and that value goes into additional shares? Or is it strictly based on revenue/profit targets, and unaffected by a reduced salary?
4. Company B doesn't have any profits yet. So the only buy-in will be the "cost" or fee associated with Company A's services. This doesn't seem right. They already have a second office location. I would think that they would move this business to the Company B entity, and then use that for evaluation/buy-in.
from University of Notre Dame in Denver, Colorado, USA
in Tulsa, OK, USA