View Full Version : Profit Percentages to investors

06-22-2007, 08:19 AM
I have been in the indurstry for 10 years as a brewer. I have an investor that has been talking to me about a partnership. I need to know if any one has any advice on how to split the profit percentages on the top or EBITA. He will be comming to the tabel with the license, property and inital investment of the brewing equipment. He would like a number before our next meeting and I do not have any idea what would be fair. I will running a small 10 BBL operation as the brewer, president, general manager and distributor. The investor has future openings of bars that my beer would be able to be featured. Any thoughts?

Butcher Scott
06-22-2007, 08:40 AM
If he is putting up all the money, I'd say his ownership % (and thereby his "profit percentage") should be pretty high. As CEO, GM, brewer, etc., you should draw a salary and maybe get 10-20% ownership.

As for your question "on the top or EBITA"... you should split net cash flow, not gross revenue or EBITA.

Just my opinion.

06-22-2007, 09:14 AM
There are lots of factors to consider here. My first intuition is to take WHATEVER is offered/discussed to a CPA/investment consultant to discuss the plans prior to making any decisions. It may cost a bit but will be VERY important to your future and the business future.

What type of business is being set up (Corp, LLC)? With you bringing in the "working" part (and he the investor/silent part) I have heard of approx. 20% ownership plus compensation as Butcher says above. As far as I know this will dictate profit AND loss which you also must consider. Who will cover possible (and expected) losses in the first few years? Are you able to cover these losses? If he does, then you may have to give up parts of your ownership to cover losses.

Good luck - sounds like an exciting adventure!

06-25-2007, 03:03 PM
I've heard of a very similar deal where the brewer took 25% of the stock, and salary, if that helps!

Mike Eden
09-27-2007, 07:36 AM
As a banker, no investor who knows what they're doing is going to agree to take a percentage of the EBITDA unless that investor is active in running the business.....reason being there's too many items deducted from revenue to get to the EBITDA. The investor is therefore going to want a vote in any expenses incurred.