Anyone own a % share of the business they work at - need advice

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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.
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Reply by a searcher
from University of Notre Dame in Denver, Colorado, USA
Mainly commenting to follow what others say, but in my perspective and experience of friends and colleagues, the 'opportunity for equity' seldom arises from handshakes unless there are clearly defined terms that they are contractually obligated to. I really don't know what you would be buying into here. If Company B has zero assets and revenues, and Company A is supporting you with engineering services, I would think you would effectively own 'Company B' and Company A would have a negotiated cut of profits since they are a partner. I could be completely wrong, but interested in hearing what others say. What is the size of Company A, and what is the proposed valuation of Company B that you're buying into?
commentor profile
Reply by a searcher
in Tulsa, OK, USA
Sean - I'm in Tulsa, if you want to grab coffee sometime, I would be happy to share my experiences with you. Very hard to answer these questions without more details. And at the end of the day it's whatever you are able to negotiate. Always have a defined way out, in case things don't go as planned - and everything should be papered.
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