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David L
David L, Attorney
Category: Business Law
Satisfied Customers: 3255
Experience:  Corporate and Business lawyer since 1997
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If I am designing and manufacturing a product, can I sell a

Customer Question

If I am designing and manufacturing a product, can I sell a portion of the future profit I will make from it in exchange for an investment now to finish off the production build?
Submitted: 5 years ago.
Category: Business Law
Expert:  David L replied 5 years ago.
Hello. Sure you can. You can offer a profits interest in your company. A profit interest gives the investor a right to a percentage of the profits as they are earned. The easiest way to do this is to form a corporation or LLC, draft a shareholder agreement or operating agreement and have these terms within the agreement. You can then offer shares of the company that carry a profit interest right.
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Customer: replied 5 years ago.
I need a clarification... What if I want to design and sell multiple products, I will have multiple investors for each product, I want one company, each product will have a separate P&L or be its own division, and investors in each product depending on their investment will get their share of the profit with each order completed. Is this legal?
Expert:  David L replied 5 years ago.
It's legal. You have to come up with a way to structure separate investments. If you use my idea above where you are selling shares or membership interests, you might form one top-level holding company and then subsidiaries with separate corporate entities and separate stock shares. That might be one way to keep things separate enough to offer separate investments.