How to handle different business offers?

I

Icarus

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I have been running a business over the last 18 months. With a recent change of partners I have been seeking capital and have been made some interesting offers which have left me in a bit of a dilemma.
Here's what I have been offered:
Offer 1: Straight finance from an individual investor in return for x percent of the business. It's just enough capital to get me going and I could probably have a small business that does fine.
Offer 2: A very successful Irish entrepenuer in an adjacent industry wants to get into a niche sub-section of my industry selling hardware and has asked me to do it with him. The plan is to start in Ireland and then use his international companies to go world wide. He wasn't very forthcoming about what shape it would take and has asked me to think about it and come back to him with an offer of what I'd like.
Offer 3: A world leader in my industry has asked would I accept an offer of setting up an Irish division of their company. They specialze in the services end, not sales or hardware. They have also asked me to tell them what I'd like re. payment/shares. But I don't even know where to start to be honest.

While I think I have a natural aptitude for business I don't exactly have alot of experience of these kind of situations. This is potentioly my big break, I want to get as right as I can.
Should I tell each offer about the other? If so at what stage? With 2 companies wanting to operate in very different niches, is it unrealistic to think I could do both? How much should I ask for in wages? How much in shares? Do I start off asking for twice as much as I want or is that dangerous? Should I turn to a solicitor at this stage?
Any advice is appreciated.
 
Icarus-are you for real ? While giving the impression that you are on the verge of the multi-million world "deal of the century " you come on a forum like this which is read by thousands of business people giving extraordinary detail account and then asking us AAMers should you tell each party about the offer from the other two ( i. e the investor , the world leader and a very successful irish entrepreneur ). I would suggest that the "investor" and " the " very succesful irish entrepreneur " at least have a good chance of reading your post or being told about the post if they are any way clued in at all. Correct me, more savvy guys out there if you like but as a humble bread and butter AAMer I'm lost for words on this post. By the way I'm thinking of putting in a bid for askaboutmoney.com .Don't tell Brendan though . Its a secret.:)
 
Icarus

Without knowing the details of your business the only person who can make the decision is you. Firstly you need to decide what is best for you and therefore what deal will give you what you need most. Also I suggest concentrating on one offer, no business person is going to invest money, time or effor in a venture with you if you are not 110% commited to it and willing to forego all else to make them more money. Remember these guys are not charity organisations and are not doing this for you, they are doing this to make themselves more money and like it or not they view you as an asset to use to get that money.

C
 
CRESPO said:
Icarus-are you for real ? While giving the impression that you are on the verge of the multi-million world "deal of the century " you come on a forum like this which is read by thousands of business people giving extraordinary detail account and then asking us AAMers should you tell each party about the offer from the other two ( i. e the investor , the world leader and a very successful irish entrepreneur ). I would suggest that the "investor" and " the " very succesful irish entrepreneur " at least have a good chance of reading your post or being told about the post if they are any way clued in at all. Correct me, more savvy guys out there if you like but as a humble bread and butter AAMer I'm lost for words on this post. By the way I'm thinking of putting in a bid for askaboutmoney.com .Don't tell Brendan though . Its a secret.:)
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I don't know what industry you operate in, but I don't look at setting up a business as being any type of a "deal of the century". All it is is the chance to make good deals but also the chance to not make them.

AAB is a place to come and share/seek advice on business related issues. That's all I've done. Can you guess what industry I am in? And before you going casting aspersions (for the record, yes I am for real) at least get your facts right. Less than 70 people have presently viewed my post, not 1000's.

But for the record Crespo, and especially considering your newly arrived status to the AAM community, I apologize for leaving an AAMer lost for words, especially a humble bread and butter one.;)
 
Icarus

Askaboutmoney is the perfect sounding board for your question. No matter how good your solicitor or your accountant or your business advisor is, they will not be able to come up with all the possible ideas and options. AAM users will come up with a variety and you can then process that information through a professional.

My own experience of solicitors is that they are not good for business advice generally. Decide what you want to do and then tell your solicitor to implement it. At this stage, an accountant is more likely to give you good advice.

Three different people have shown enough faith in you to put proposals to you. That's a good sign. You acknowledge your own lack of experience and from reading some of your posts on Askaboutmoney, you do seem to need someone with solid commercial experience and wisdom to complement your skills. That's what business partnerships are all about - two or more people working together where each has different strengths.

I don't like the sound of option 1. "just enough to get by" is not enough. The business plan needs to be more ambitious. A business needs great potential to compensate for the huge risk and effort involved.

You need to assess the potential market size of Options 2 and 3. As an entrepreneur, you will probably work a lot better with another entrepreneur than with a large company. Decisions will be faster - there should be more excitement. I would suggest putting the structure and shareholding to one side for the moment. Do up a rough business plan. Identify the resources which you need. Do you need particular marketing or technical skills which you don't have which a potential partner might provide? Discuss the business plan with the potential partner and avoid discussing the structure to see do you agree on the business plan. If there is rough agreement on it and he is excited by it, you will be in a better negotiating position.

Continue the discussions with Option 3 simultaneously. Find out in detail what they are proposing. Don't waste their time but give it serious consideration. Make suggestions which they will find useful even if they don't do the project with you.

A few other general considerations:
Which of the businesses or services is inherently more attractive to you? Do you prefer selling hardware or providing services?

Whatever deal you do must have some sort of exit strategy if you want to get out after a few years.

I would echo Capaill's advice. You can run only one new business at a time. It's tough enough getting a new business off the ground without trying to get two new businesses off the ground.

Brendan
 
Hi Brendan,
Thanks for the feedback. I think that your suggestion of keeping early discussions focused on the future of the business as oppossed to it's internal structure a very good one.

The offer of the cash investment is attractive but not my first choice. My heart likes the idea of owning most of the pie but my brain tells me that at this stage in my life it's better to own a smaller slice of a bigger pie.

The offer from the Irish entrepenuer is a very attractive one but feels like a bit of an unknown quantity. It is a facet of my industry that really is in it's infancy although the potentiol for high returns is undeniable. There is also the attraction of going international (what this investor wants to do through his companies around the world) once the business model is successful and fine tuned in the Irish market.

The offer to join an already established world player is the one that seems to hold the greatest atraction for me at the moment. It is in an area I have worked for many years, have many contacts and is the kind of position I have always wanted. I really do feel I could make a success out of this option by just doing what I am already doing. One of the issues I have with it is that I would be limited to operating only within the Irish market. I am a naturally ambitious person and don't like the idea of glass ceilings, even if they are extremely high. One attraction with this option is the oppurtunity to access shares in the international holdings company for which the plan is to go public in 10-15 years.

While my remuneration and shares deal won't be the first card on the table, it is something I need to work out. An accountant friend said that the position of MD setting up these companies would normally warrant a generous package but the problem is that I'm coming from a blank slate and don't have a previous relative wage to base it on. He also suggested concentrating on shares rather than wages. Has anyone any thoughts on this? I sold myself short on wages in my last partnership and really don't want to do it again.
 
One attraction with this option is the oppurtunity to access shares in the international holdings company for which the plan is to go public in 10-15 years.
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That's a very long term plan? 10 years to go public? I would not be particularly interested in shares which might only acquire real value after 10 years.

I don't think that you need to speak to a consultancy at this stage. You need to get a business plan together and have serious business talks with the international company. Stick in a salary for yourself of €100k in the business plan. You can vary it later.

Stay in touch with the Irish entrepreneur as well, but put more work into your proposed option. If it does not work out, you don't want to have burnt your bridges.

Brendan
 
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