Maximize Profit Sharing Agreements in the UAE with Legally Binding eSignatures

How to eSign a document: e-signature legality for Profit Sharing Agreement in UAE

what percentage that I give my business partner so I got a great question from one of my Google+ readers love you guys Korea s Etica who wrote in and basically she has a business and wants him to come in and be her business partner in the company and is wondering do I have to give up 50% of my company to this person so here's the thing okay you can you can skin this cat in a lot of different ways there's no rule that says you have to give up half your company to a partner coming in for me the thing that you want to look at one is how much value is this person bringing is the person bringing equal value to what you're bringing yes or no and then to how long has this company been around is this a just a startup idea where you haven't done anything yet or have you been around for a little while and you've already built up something that you know that person hasn't contributed to so obviously you've been around for a longer period of time a new person coming in doesn't deserve as much as you have already built this thing up but if it's brand new startup then they have a case for wanting to have a bigger piece of the pie regardless of the decision of how much percentage you're going to give up you have to make them commit to the business this is so important I get that it's exciting at the beginning okay partnerships are always exciting because at the start you're you're struggling right you're feeling like I can't do all this myself I don't have the skills and this person has great skills that can help and I don't want to do this alone and it's just there's so much pain of going it alone and so much excitement in bringing somebody new on that all you see is the good side not a lot of partnerships will work out all the way to the end and you want to make sure that you're really getting the right person on board it really is like choosing a spouse okay you have to know them like them trust them love being around them and think that it's going to work out for many many many years and what do you do before you get married you date and that's what you need do with your business as well you need the person to commit to the company you just give them equity and that can come in two forms one they buy in they have to pay they have to pay for equity in your company your business is worth something you're not just going to give it away they have to buy a certain amount at a certain price the other way is to earn in and so instead of just giving them X percent of the company they earn it when they hit milestones so remember I had a software company when we bring on a new salesperson who started by myself and my business partner we're bringing on a third partner who's going to be our sales person and he was joining relatively early on but I didn't know him too too well and I didn't want to just give him a piece of my company because the last thing you want to have happen in your business is have a guy who owns a piece of your company who's just a dead weight who isn't doing anything for the company and is it somebody you don't want to be around and that can happen very often with a lot of companies so we made them earn in and you said ok we'll give you up to whatever it was 20% of the business you are in your first 5% if you can close X number of deals within this amount of time and we set milestones so you get your first 5% when this happens your next 5% when this happens and so it shows it there they have to be committed to the business and actually get results for you before you're going to give them equity so it encouraged you to have some kind of benchmark to put in if they're not going to be buying in and giving you money for your shares the last thing I'd encourage you to do is for anybody who's bringing on a partner is have a shareholders agreement it's so important and make sure that you include a shotgun cause a shotgun cause basically is something that you write into your shell hose agreement that allows one partner to buy out another partner if it's not working out you know for whatever reason it's just not working out you're fighting you're doing all the work and this person is not you know doing anything and they own 50 percent of your business how do you get them out and a shotgun Clause says I will buy your shares at this price or you have to buy all of my shares at the same price so you get to pick the price and the other person gets to pick either accept the deal or buy you out so one way or the other somebody's getting bought out of the business you have to be smart with what price you set but it's important part to have in your shareholders agreement before you bring on a partner the other thing you might want to look at is a piggyback clause and that's basically where if one person is a minority shareholder if you decide to sell that person can come with you so you know if you're the majority shareholders if somebody was a minority shareholder you sell your business that person has to go with it so you don't have one person holding up a deal so if you have a deal to sell your company that minority shareholder can cause a lot of problems for you and prevent the sale of the business which you know you don't want to have happen so that person is dragged along with the sale of the company anyway a few things I think and think about get a lawyer involved but you definitely don't have to give up 50% of your business make sure they're offering value make sure they're either buying or earning in and get your shotgun clause in your shareholders agreement before they sign up believe for everybody watching liked the video thumbs up below let me know what you think leave a comment below ask a question in the comment section below and if you want to see more videos like this you can click on my face subscribe to the channel thank you so much I'll see you soon