John Hyre - Recommendations?
I saw a post on here at one point recommending a guy named John Hyre. I did a google search and turns out his office is an hour away. Anyone every heard of this guy, worked with him and can give a recommendation?
I've heard of him, but never worked with him. He used to moderate over on CRE Online, but now he has his own website coupled with three other investors. Check out his website and post on the newsgroup or send him an email. He is very accessible, but also very in demand. In fact, he posted today that he'll be gone until Monday...he's taking a trip with his daughter.
Mark- Good morning. Sounds like a good project for you. I would say that 10% is a reasonable figure. If the other party doesn't agree ask them to articulate why they feel more is necessary. Let us know what the final figure is.
I don't see anyway I could recommend a percentage without knowing how good of a deal it is, how much capital you are having to put in? They are not contributing capital or guarantees on the notes.
Generally speaking, maybe take 2-5% (depending on quality of deal, similar to RE agent commission) of a deal on average based on total cost to develop to get a cash figure, then ownership percentage maybe similar to what the value the new business at. Example- Your working on a very good $1m project, 4% is $40k. You value this new entity at $300k (from a TVM or market value equity perspective). Ownership stake of 13.3% may be appropriate. Never been involved in something like this, so curious to see how this works out.
i would nego. low and see if they flinch and go up from there. you can always go up and you can't always go down.....kenmax
After having been involved in 2 fairly ugly minority shareholder disputes, might I suggest you offer something like the 10% of after tax profits for x ## of years - this way you do not have an ownership interest that might come back to haunt you - or even give him the right to question how you run your company.
My attorney (real estate specialist) promised me there is nothing illegal about paying 'finder's fees"; where your bird dog might want to be careful is in officially negotiating.
If you decide that you prefer issuing stock (and i think you made some good points to warrant this concept) I'd suggest you also have some sort of pre-arranged stock buy-back in case things get dicey.
Good advice, I appreciate it. I think I may sorta use 5% of the deal as a standard starting point and negotiate from there, depending on complexity and other factors the bird-dog brings to the table.
[ Edited by commercialking on Date 07/22/2004 ]
Are you sure the birddog wants a %?
I agree with the advise to not share ownership, so you may want to give non-voting shares that get a % of profit, or negotiate a fair cash value, possibly paid over a few years.
Congrats on the deal.
Peter
If you give up say 10% ownership, then he/she would be responsible for 10% of future losses as well. If they're not in a position where they could help you weather the storm, it may not be a good partnership.
We all know Cash is king. Whatever you would have given him in cash, I'd offer less in the company stock (perhaps half) as it has more longterm benefits and should be looked at from a time value of money or IRR equasion rather than simply a set value.
I'd find out what they REALLY want. WHY do they want an equitable interest? Do they want the cash flow? The tax benefits? Appreciation? Just want to be along for the ride? You may be able to give them what they want without giving an equitable interest.
Don't give up the whole farm. Happens way too much in the business world.
As far as my history, I've usually gotten/given about 5k per deal. The better the deal, the better the money.