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MShore Law
MShore Law, Attorney
Category: Business Law
Satisfied Customers: 25285
Experience:  Drafted Negotiated and/or Reviewed Thousands of Commercial Agreements
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My girlfriend purchased an existng skin/beauty clinic established

Customer Question

My girlfriend purchased an existng skin/beauty clinic established in 1989, one year ago. The business is thriving in a depressed economy and wants me to help her and continue to grow. She put up the capitol initially,but needs a trustworthy partner. She has a business manager, how should I approach my concerns and proposal to this offer? I am definately interested.
Submitted: 2 years ago.
Category: Business Law
Expert:  MShore Law replied 2 years ago.
Thank you for the post, I am happy to assist you by answering your questions. Is your potential partner requesting a cash buy-in? What percentage of the business is she offering you?
Customer: replied 2 years ago.

She has not asked for any money, she hasnt offered a number/percentage. She has 900 clients, and can't serve them all. She wants help, the only way I would feel comfortable is to be a 50/50 partner... I want to know legally what would be the best proposal for enter and exit.

In order to continue to grow, taking ownership as she would expect, I need a vesting interest. All capitol has been paid by her via her inheritance

Expert:  MShore Law replied 2 years ago.
Thank you, what is the structure of the business, is it an LLC, S-Corp, sole proprietorship?
Customer: replied 2 years ago.
I am not sure
Expert:  MShore Law replied 2 years ago.
ok, this is important because it determines whether you would be a shareholder or member and what would need to be done to document your ownership interest. In any event, a written agreement (an operating agreement if an LLC, or a shareholder agreement if an S-Corp) would need to be executed between the parties establishing the respective rights, voting power, and what happens in the event of a dispute or if one party wants to terminate his/her interest in the company. You would need an attorney to draft these documents, the costs could be split equally or assigned to the company. Please let me know if you need additional guidance.
Customer: replied 2 years ago.
I want to know how to go about approaching this arrangement...ie, what language to look for, what to ask for, what points to consider, to start the negiotionation process
Expert:  MShore Law replied 2 years ago.
You should schedule a meeting t first inquire as to what she contemplates as the partnership division, what the current financial liabilities and assets are, expected liabilities, if the proper insurance is in place protecting both the business and the owners in their personal capacity. You should not offer up a number first, you should let her do so and negotiate from there (the first person to pinpoint a number often loses in the negotiation). Please let me know if you need additional guidance.
Customer: replied 2 years ago.
She is asking me to draw up my concerns, what should that be?
Expert:  MShore Law replied 2 years ago.
Your concerns should be:

1) Percentage of equity ownership, and the associated financial liabilities;

2) Termination provisions; and

3) Personal liability exposure.
Expert:  MShore Law replied 2 years ago.
Please let me know if you need additional guidance.

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