Bad Deal or Good Deal? Please Help!

Discussion in 'Growing and Managing a Business' started by medizac, Feb 14, 2012.

  1. medizac

    medizac
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    My friend owns a big site that makes him big money. He started it on his own about 6 years ago and has been sole owner of it ever since. As for SEO, he knows his stuff. But I think he's clueless as to how to run his business to his benefit. What would you say?

    Using a sub domain of his big site, he wants to form a partnership with a guy he's employed online for close to two years. The relationship doesn't go much beyond that. The deal puts 100% of the risk on my friends side. The other guy has nothing invested in the deal -- no money, assets, etc. Simply for his labor, he would own half of the sub domain start up, which is connected to my friends big site and carries the same reputable brand name.

    In my opinion, the deal is a huge liability for my friend for a few reasons:

    1) My friend doesn't know the guy well enough to enter into a binding agreement that would render a 50/50 split in ownership of a site that's already made the big time.
    2) The guy has nothing to lose and everything to gain. (His only contribution would be in the form of labor, nothing my friend couldnt hire someone to handle.
    3) Making him co-owner offers my friend little protection or escape from a guy who might stops performing his duties, gets lazy, no longer sees eye-to-eye with my friend or something else steps in the way of business down the road.

    If that section of the site makes it, which it will, and all was good between my friend and the guy for the life of the partnership, great. My friend makes even more money and the guy goes from nothing to something. *But let's be honest here -- the probability of this being a good deal for my friend is unlikely when you consider the above.

    Please drop me your opinions on this matter. I'd like to present my friend with them whether they stream line my opinions or not. Also any advise on how to satisfy both parties would be extremely helpful.

    Thanks!
     
  2. jcworlditsme

    jcworlditsme
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    I must admit I would be hesitant to enter into such an agreement with someone I hadn't met in person at least once.
     
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  3. Shahrier

    Shahrier
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    Well he knew the guy for 2 years and it seems from what you told us that your friend really trusts this person. I agree that he shouldn't get a 50/50 share in the site. I would say the maximum he should give him is 49%. So if he is not doing what he's supposed to, he can fire him as your friend would own 51%.
     
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  4. topfilings

    topfilings
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    The big question is -- how bad does your friend need this guy???

    If he could easily hire someone else to do his work, why would he form a partnership and give up a percentage of his business? But if the guy is necessary and he can't run the business without him, then obviously he should work something out...
     
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