| Author |
Message |
Jim Schad (Jim_schad)
Junior Member
Username: Jim_schad
Post Number: 99
Registered: 7-2002
| | Posted on Monday, August 26, 2002 - 9:53 am: | |
You all have given me great advice and some first steps to take should this move forward. I appreciate all the unbiased opinions. I'll update as it moves. |
arthur chambers (Art355)
Member
Username: Art355
Post Number: 614
Registered: 6-2001
| | Posted on Saturday, August 24, 2002 - 10:55 am: | |
Jim:
the guys are right about the lawyer portion of the mix, however they forgot a competent real estate agent who can advise you on the value of these stores, someone familiar with the locality, mix of people, and someone who can give you an idea of what these businesses are worth in their present condition, and what they would be worth after you have properly managed them. That number should give you a good idea of what you are bringing to the party, and what you should be bargaining for. I would also look at the financing used to acquire these places, what would your liability be? and will you and your efforts be needed to pay off the purchase price. All of these items are factors to consider when going into these types of deals. Whart is absolutely right about the lawyer though, get the absolute best to advise, and a run of the mill to draft the paper work, with the best to review the final work. You can save quite a bit by doing it that way.
Best of luck |
Russ Moore (Rem9)
Junior Member
Username: Rem9
Post Number: 96
Registered: 6-2001
| | Posted on Saturday, August 24, 2002 - 6:41 am: | |
Jim,
Getting professional assistance makes a great deal of sense. That should eliminate you from being cut out of the deal on a technicality in the future. Certainly it is understood the fellow is a frat bro, but if something happens to him, what of his heirs? More than one person has been cast aside when the unexpected happens. One of the main definitions will be whether you are an employee or a part owner. That will paint the liability picture. If you are a part owner, perhaps you will want to look at incorporating as a way to protect personal assets. Again, a lawyer versed in such matters can guide you through the jungle here.
Best of luck, it sounds like an excellent opportunity with the right foundation at the onset.
Russ |
wm hart (Whart)
Member
Username: Whart
Post Number: 480
Registered: 12-2001
| | Posted on Saturday, August 24, 2002 - 1:27 am: | |
Here are some things to think about:
1. Some investors are contributing money; you would be contributing time and expertise. What is that job worth, in dollars, if they were to hire someone to do it? How much money will they be paying you as a salary or "draw" against your contribution? The difference is arguably the "value", on an immediate cash basis, of your investment of time and expertise, plus a kicker for the improvement in revenues you create.
2. How would your "equity" be reflected? In shares of some corporation? And, how would this overall enterprise be structured? The shares' value can be diluted (as will your interest in any number of ways). Would each store itself be owned by a corporation, which, in turn, is owned by a common corporation?How are these guys going to structure the deal for their tax purposes? What if one store shows huge profitability and another is a loser? Does that mean your return is a wash? Or do you realize the upside on the "good" store?
3. What if, as you mentioned, you do this, get it going, and then want to "cash out" and move on. How can you liquidate your holdings? How would your interest be valued?
OK, look, i'm not a corporate lawyer or even a "business" lawyer, but i've hung around with some pretty good ones. Best money you can spend: get somebody really brilliant, not to paper the transaction, but to advise you on these and other issues, as a big time lawyer. Hire a local business lawyer to put the papers together, if you get that far, based on, and subject to the high powered lawyer's advice. That way, you get what you pay for: first rate advice (including tax advice) without paying big law firm fees to actually do the •••• work (which is where they really make their money from you). |
Horsefly (Arlie)
Junior Member
Username: Arlie
Post Number: 171
Registered: 5-2002
| | Posted on Friday, August 23, 2002 - 7:44 pm: | |
Jim, I would check and make sure that there are no financial obligations hanging on those stores. I am in Arkansas myself. I saw a story on our local newscast about one (or more?) convenience stores that simply closed overnight and the Pakistani owners skipped town without even telling their employees what was up. Folks showed up for work, and the place was locked up.
Also had some other convenience store owners here in Arkansas that were brought up on price gouging charges by the state Attorney General because they raised gas prices to $8 a gallon on the afternoon on September 11th to take advantage of the panic from people wanting to fill their gas tanks. Make sure you know what you may be getting into. Kind of like buying a nice Ferrari with a timing belt hanging on by a thread. |
Jim Schad (Jim_schad)
Junior Member
Username: Jim_schad
Post Number: 76
Registered: 7-2002
| | Posted on Tuesday, August 20, 2002 - 12:25 pm: | |
still light on details, but apparantly the current owner took all the money and ran the stores dry. So basically he embezzeled or stole from himself/suppliers. I don't know any financial terms yet as this was just mentioned to me last Thursday. The guys were considering doing it, but wanted an operator in mind. I am employed and self employed at this time so this would have to be a pretty decent deal for me to put other things on hold. I was really hoping I could snag some equity, get the things running smoothly and then back off and be semi absentee and collect my checks. I have a feeling it won't be as lucrative as I hope/need. I just wasn't sure if people take 2% or 20%. As I find out more I can update you. Thanks. |
djmonk (Davem)
Junior Member
Username: Davem
Post Number: 85
Registered: 1-2002
| | Posted on Tuesday, August 20, 2002 - 10:57 am: | |
Jim I would ask around if you dont know allready why these locations closed. Maybe call Conoco itself an also agian if you dont know already find out much the partners are paying for these stores. Your prospective partners need you or someone like you to make this deal work at all, thats your advantage. Are you self employed now an taking time off to try this venture or have flexibility in your job. Point is something has to go its hard to do both well in operations, will you make enuf to compensate for what you might lose now? |
Jim Schad (Jim_schad)
Junior Member
Username: Jim_schad
Post Number: 68
Registered: 7-2002
| | Posted on Monday, August 19, 2002 - 3:58 pm: | |
Stores are branded Conoco right now. I am employed. I had hoped to get them running smoothly and then delegate and run semi absentee. Not sure on the chain of command and no I don't want to always be the pledge. |
djmonk (Davem)
Junior Member
Username: Davem
Post Number: 84
Registered: 1-2002
| | Posted on Monday, August 19, 2002 - 3:43 pm: | |
Jim. Sounds like a lot of work. Are you employed right now? Are these stores franchised or affliated with a national brand? Im in a similar biz an also train franchisees at our company headquarters. Have met people in similiar circumstances to yours. Biggest problem can be who answers to who? Your friend? His partners? How many hours do they expect you to put in? Finally once all the stores are open an running smoothly, can u delagate off some of your duties or will you be the frat boy always seen as the pledge! |
George Daina (Oof_n_goof)
Junior Member
Username: Oof_n_goof
Post Number: 98
Registered: 7-2002
| | Posted on Monday, August 19, 2002 - 3:32 pm: | |
Think you have to answer that yourself, as only you know how much you need to make a comfortable living, and have enough left over to buy a couple of Enzo's |
Fred (Iluv4res)
New member
Username: Iluv4res
Post Number: 46
Registered: 8-2002
| | Posted on Monday, August 19, 2002 - 3:30 pm: | |
Negotiate as much as possible up front. Then have a sliding schedule that vests and/or increases ownership dependent upon the success of the company. You could also take stock in lieu of salary/bonus.
The % will depend mostly upon how valuable you are to them and/or how easy it would be to find a comparable replacement for the job.
Also, I am assuming that they found the deal from your post. Obviously, if it's your deal, you can negotiate more.
I don't think there's a rule of thumb, but somewhere between 0-50% is reasonable. You only get what you negotiate!!! Good luck!! |
Jim Schad (Jim_schad)
Junior Member
Username: Jim_schad
Post Number: 67
Registered: 7-2002
| | Posted on Monday, August 19, 2002 - 3:22 pm: | |
I have an attorney friend that has a group of investors that are about to purchase 5 defunct convienience stores in arkansas. They want me to run them. Not work them, but just be an operations mgr type as I used to do this for 256 7-Eleven stores. I don't know specifics, but they want to give partial ownership/equity and pay based on perf of the stores. I know that doesn't say too much, but I wonder what % of equity would be standard or reasonable to ask for.
Obviously there are lots of questions, obligations, liability, what ROI they want how much money the stores can make, why they closed etc.
I a trust the attorney as he and I were frat bros and have known each other for 10+ years, but I am not versed on partial ownership deals. |
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