IM Moving. Should I sell my business to my brother or stay on board?
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I moved to Minnesota a couple years ago and started a flooring business. My brother has worked with me the entire time. He has been paid 35% of the profit of each job we do. The business in entirely in my name. So my brother has basically been a subcontractor/silent partner.
I am going to move to another state to start a flooring business of my own and would like to sell my brother this business and half of the tools and equipment I have acquired. How do I go about selling it to him?
On another note: We have also considered keeping me on board even though I will be in another state. I would still take calls, emails, do internet marketing etc for 25% of the total job. If I took this route; should I keep business in my name or his? I think I would prefer to have it out of my name so I dont have to claim taxes 2 times.
Please help me out with what might work th best for our situation. Thank you
August 31st, 2010 at 11:30 am
I would sell it but keep your name in it for a couple of years to give him a smooth transfer. Help him with the marketing but take a lesser cut since you wont be the owner. This also makes sense incase he decides to do something else or the business goes pear shaped. I would sell it for something like 3 times the annual profit – you would have to work our a ratio you feel fair, but then subtract the value of tools etc you are taking.