Investor Return

[tequiladrum]

I am looking to open a new club and have a question about investors...A business associate of mine would like to invest some money into my new venture. My question is how much of a return should they get back on there money? I do need their capital, but would like to buy them out within 3 years.
Their portion would be approx 10% of the whole investment I would be undertaking. ex. $50,000 of a $500,000 investment.

Thanks for your help.
Tequila

[excellentbars]

TQD

Hey buddy...I am now opening 2 new bar/nightclubs in the NW and have opened and owned 5 other concepts....I always find Raising capital tricky and different in every situation...

One way I like to lock investors is to do a 60/40 payback up to 60% of the capital they have invested........

Investor A=$100,000 for 10% share

60% of profits will be paid back to the share holder until $60,000 has been returned to the share holder....At this time the share holder then recieves 10% share for the duration until the time that the Exit strategy is executed.

Buy Out
At this 3 years by out phase you will want to have already outlined an exit clause for the Share Holder...In which you will pay a set price such as $100,000 to $150,000 or agree to A market appraisal buy out.

You= Get 1 Appraiser to put a value on the business
Share Holder=Get 1 Appraiser to put a value on the business

The 2 Appaisers hire a 3rd Appraiser to find a "Fair Market Value" to the business.....

Chris

www.excellentbars.com

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[excellentbars]

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