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Marcus Parker
Marcus Parker, Attorney
Category: Business Law
Satisfied Customers: 460
Experience:  Experienced in corporations, LLC, partnerships, etc., formation and operation
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I am a creative director who has had my own design business ...

Customer Question

I am a creative director who has had my own design business (sole shareholder s-corp) for 20 years and has worked with on all levels of advertising, branding, photography and strategic planning. I recently was introduced to a woman whom became another client. Upon review of my portfolio (which is quite extensive) and the fact that our work relationship went so smoothly she decided to introduce me to an idea that she had for a new business. Within a few weeks of conversing on the subject she asked if I was interested in "starting a business" with her. She brings her business mind and connected network to the table and I bring vast creativity, network and 20 years of applicable experience. (Your typical creative / business joint venture.)
The last few weeks have been a whirlwind, name development and acquisition, logo and branding development, web (e-commerce) initial development, etc. We have no formal agreement.
After the name was decided on (which I developed) she set up an s-corp. The online name is XXXXX XXXXX name, the s-corp is in hers. We are at the point of structuring how the relationship is going to work short and long-term and she is asking for me to sign the name over to her. I''m not ready to do that yet. She is saying that her attorney, accountant and dear friend (who is owner of a huge .com, yes you would know them) is telling her that she has nothing to offer (from an ownership perspective) at this point. Confusing to me.... She''s asking for an offer of what I am expecting. Also, I am putting no money in upfront but tons of "sweat". My hourly rate would be somewhere between 65.00 and 85.00 depending what I was doing from the creative/branding side and I am putting in vast amounts in all other areas as well.
In closing, I really have enjoyed working with this woman and like her as a person, we have the same vision, etc. We bring the right mix of talents to the table to create something successful. I''m feeling a little slighted and not sure how valid that is. I am the over-achiever right brain creative and stuff like this makes me crazy. What is the best way for me to do this. Any advice would be greatly appreciated.
Submitted: 6 years ago.
Category: Business Law
Expert:  Marcus Parker replied 6 years ago.

It looks like she has been using her charm and charisma to get several weeks of work out of you and now wants you to sign over the name (the only thing you currently have a claim to) and leave you holding the bag. She and her attorney have evidently come to the conculsion that she doesn't need you, or at least they don't see a role for you in the new company and, unless you can formulate such a role, are evidently ready to cut you loose.

You should ask for a long-term contract or significant ownership (stock). Without something concrete like this, it appears that it is nothing but smoke and mirrors.

Customer: replied 6 years ago.
When you suggest significant ownership, what does that look like? I never expected 50% but she is offering 5%. Seems low. What type of offer should I give her based on work done thus far and future expectations? What seems fair to you and why? We're talking over 150 hours in two weeks. She's making the initial investment of 150K while I'm bringing in no money, just time. Thanks.
Expert:  Marcus Parker replied 6 years ago.
You didn't mention before that she is making a major capital investment. I would ask for $10,000-$13,000 or so to compensate you for the time you have put into it thus far. This is roughly equivalent to the time times the hourly rate you mentioned. When coverted to a percentage of stock ownership, it actually is not that far from the 5% she did offer you ($85 x 150 hours = $12,750, which would be 8 2/3 % of $150.000). Considering that she too has put considerable insight, creativity, and expertise into this venture, I would not be unhappy with an employment contract which provided you some combination of cash and equity for the energy you have expended thus far.

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