THOUGHTS ON DEAL WHERE SELLER KEEPS MINORITY EQUITY STAKE

I'm considering a deal where the seller is interested in keeping 20-30% equity stake in the company for a several years. Some questions and thoughts on this:

1. How do you structure a deal like this? Purchase X% of the stock/interest in the company, or sell the company completely with seller participating on both sides of the deal? What are the implications of each?

2. Deal success hinges on establishing a great working relationship with new business partner.

3. Pro: this shows confidence in seller's expectations of future growth.

4. Con: can't use SBA loan with such a deal structure.

5. Do you negotiate ahead of time the eventual sale of the remaining stock/interest?



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