New job?

[goodal]

This is convoluted, complex and confusing, but I'll try to condense this down and make it as concise as possible.

As I've stated before, I'm a partner in a very small consulting firm. I own 20% at this point in time and am "given" an additional 4% every year. We've done ok, but things have really trailed off the last couple of years. On top of that, our relationship has soured some recently. Enough so, that I've been passively looking for new employment for about a year now. Its not bad enough that its unbearable, but enough that it wouldn't hurt my feelings to get away from him. I've been contacted by an acquaintance that is established in a nearby town (that I have always wanted to work in) about starting up a new firm. The firm would not exactly be new. He has an established firm that would fund it to get going and has other established engineers to bring in, but it would be a new firm name and right now none of the potential employees are employed by the same company. My partner and I have been in discussions with the new guy about merging, but my partner has decided he is not interested. I see alot of potential in the new city due to several recent vacancies and am VERY interested in being an equal partner of a full service firm (we are mechanical only at this firm).

So in short, what would you do? Do I abandon my old firm for the new or just stick this out and hope the money/relationship doesn't get any worse? I am a little scared to make the jump because of all the unknowns. I have kids, mortgage, loans, etc. all the standard excuses that make me cling to my steady paycheck, but this could be BIG for me. It could also be disastrous if the new company fails, my new partner bails on me and my old partner wouldn't take me back. I realize there would be other options at that point, but still, its an unknown. I am not independently wealthy and need a steady paycheck to pay the bills. I have no family business or great big pile of money sitting around for me. My wife is a stay at home mother which is nonnegotiable. This is it. My income has to keep coming in or we will be living in a van down by the river in 6 months. I would not have to relocate. In fact the new company may be closer to home than I am now. There are a few more details, but I think they would just muddy the water.

Any input?

 

[Supe]

This is convoluted, complex and confusing, but I'll try to condense this down and make it as concise as possible.

As I've stated before, I'm a partner in a very small consulting firm. I own 20% at this point in time and am "given" an additional 4% every year. We've done ok, but things have really trailed off the last couple of years. On top of that, our relationship has soured some recently. Enough so, that I've been passively looking for new employment for about a year now. Its not bad enough that its unbearable, but enough that it wouldn't hurt my feelings to get away from him. I've been contacted by an acquaintance that is established in a nearby town (that I have always wanted to work in) about starting up a new firm. The firm would not exactly be new. He has an established firm that would fund it to get going and has other established engineers to bring in, but it would be a new firm name and right now none of the potential employees are employed by the same company. My partner and I have been in discussions with the new guy about merging, but my partner has decided he is not interested. I see alot of potential in the new city due to several recent vacancies and am VERY interested in being an equal partner of a full service firm (we are mechanical only at this firm).

So in short, what would you do? Do I abandon my old firm for the new or just stick this out and hope the money/relationship doesn't get any worse? I am a little scared to make the jump because of all the unknowns. I have kids, mortgage, loans, etc. all the standard excuses that make me cling to my steady paycheck, but this could be BIG for me. It could also be disastrous if the new company fails, my new partner bails on me and my old partner wouldn't take me back. I realize there would be other options at that point, but still, its an unknown. I am not independently wealthy and need a steady paycheck to pay the bills. I have no family business or great big pile of money sitting around for me. My wife is a stay at home mother which is nonnegotiable. This is it. My income has to keep coming in or we will be living in a van down by the river in 6 months. I would not have to relocate. In fact the new company may be closer to home than I am now. There are a few more details, but I think they would just muddy the water.

Any input?

I'd say if you have a firm that has been trending negatively, you may be more likely to find yourself in dire circumstances by staying, than by moving to a new company with competent individuals which have the financial backing of another firm. I think the risk it mitigating SIGNIFICANTLY when you are not funding the new venture out of your own pocket.

 

[Dexman PE PMP]

Agreed with supe.

 

[Road Guy]

Is there decent backlog at the new place?

Is your work trailing off negatively every year or did it just flat line a few years ago and never recover?

You said your work relationship was going south with your partner or with your clients?

Would you be able to sell your 20% share or would you lose it? Does your (assume LLC) allow you to retain your 20% and not work there every day or is that part of the contract?

 

[goodal]

There is some backlog, but i doubt enough awaiting to keep me busy at first.

It fell off dramatically and is ever so slowly creeping up.

Work relationship with partner going south. He is becoming a grumpy old engineer (read: butthole).

If I leave, I lose the 20% without any compensation. Whats worse is there is a non-compete clause in our contract. I would not be legally allowed to work in a certain portion of the state the current firm is located in. Fortunately, the new firm would be in an adjacent state and a market we have never been able to break into.

 

[Road Guy]

but non competes are generally for a specified length of time?

 

[engineergurl]

but non competes are generally for a specified length of time?

that and you can get out of them by showing that it is preventing you from earning a wage doing what you are trained to do

(so said my lawyer when I had an issue with a non-compete clause- all it took me to get around it was to go talk to the lawyer)

 

[Dexman PE PMP]

If your current partner is being a butthole, what would prevent him from bidding on projects your new employer is going for just to prevent you and the new firm from doing it?

 

[MetsFan]

There is some backlog, but i doubt enough awaiting to keep me busy at first.

It fell off dramatically and is ever so slowly creeping up.

Work relationship with partner going south. He is becoming a grumpy old engineer (read: butthole).

If I leave, I lose the 20% without any compensation. Whats worse is there is a non-compete clause in our contract. I would not be legally allowed to work in a certain portion of the state the current firm is located in. Fortunately, the new firm would be in an adjacent state and a market we have never been able to break into.

Wow, I didn't know it could work like that. At the two small firms I've worked at, I know the partners could sell back their shares to the company if they decided they no longer wanted to be a part of it.

I say go for the new venture. It seems there is a lot more upside to it, especially since it is a full service firm. Good luck!

 

[Road Guy]

I had a friend (GA) who had a similar arrangement, he ended up taking them to court to get a portion of his ownership percentage, but it took him a few years..

his argument was that he personally "won" a majority of the work and should have been entitled to more $$ when he departed than whatever was they offered him..

But it took him at least 4 years, I think he basically just wore the firm down and they settled out of court..

 

[goodal]

Its for five years and its written in the contract that if i leave before 10 yrs he gets to buy back the shares for $1 each (20$). He could bid against us but i dont think he would. We kind of use an honor/ buddy system around this neck of the woods. You give the job to your buddy and dont screw people. I am pretty sure he would stick to that. It would be awesome to have some sort of safety net, but i cant think of what it would be.

 

[envirotex]

It's never fun to work for a butthole...what's his exit strategy? Is it 5 years? 10 years?

 

[iwire]

seriously talk to a lawyer about your shares prior making a decision to jump. What is your existing company net income and how much of a backlog they have now? any existing contracts with clients, length? etc..

that 20% might not even worth much after you look at all the numbers.

How you even look at the book of the company?

 

[goodal]

The idea was for him to start leaving in 5 yrs. He's kind of crawfishin on that now that we are getting close to it. I'm fairly certain the 20% is worthless if I leave. I do get a quarterly report and could have more if I wanted I guess.

 

[MetsFan]

Did you have to buy in at any point in time?

 

[Dexman PE PMP]

What about buying him out then merging with the other firm? Looks like butthole wants out in the near future, this could be a viable out for him.

 

[goodal]

I have not had to buy in. The 4% a year is gifted to me. Not a bad deal, but he holds it over my head that he is being such a nice guy. Honestly, I would like buy him out and merge. Problem is he doesn't want out that soon and I don't have the dineros to do it. However, If he's faced with losing me and having to do all of it himself he may open up to the idea.

 

[envirotex]

Could the newco help you buy him out?