As someone already said, hiring a lawyer is a good idea. Another post talked about ownership being allotted by how much each partner invests in buying the firm. That makes some sense but what if the non-licensed employee is able to pay more? There's more to consider here.
If you are going to hold the licenses required in every state outside your home state, you will be adding the most value to the new partnership. They couldn't work in those states without you (or by adding partners licensed in those states, or by partnering with a local firm in each state). You'll also be carrying the most professional risk. That's worth something.
Longevity with the firm only matters if it means that over that time, an individual has developed the primary, loyal relationship with significant clients. Maybe one of you has. Maybe all three of you. If the current owner is the primary (only?) face of the firm, maintaining your current client list isn't a given. In that case, this kind of transition often leads to clients deciding to shop around. With the risk that clients may leave, what are you buying?
Someone who could assess the value of the firm would be helpful. Steve Wintner, who wrote Financial Management for Design Professionals (great book), may be a good resource for that.
Your boss hasn't helped any of you by waiting so long to start a transition process or by trying to control it. Still, this may be a very good opportunity for you. Let us know how it goes.
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Carol De Tine AIA
Carriage House Studio architects LLC
Portland ME
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Original Message:
Sent: 04-19-2019 19:54
From: Joel Niemi
Subject: Small Firm Transition - HELP!
Make sure whatever ownership agreement is created covers adding additional members and members leaving - either at their choice or as decided by a majority of owners.
Do regular (annual, at least) evaluations of the value of the firm.
And the agreement should be fair - consider what would happen if you were the one voted off of the island.
Original Message------
Ownership percentage should be based on your individual equity investment in the company. For instance, if your current boss wants to sell the company to the three of you for $100,000 (just using a nice round number), then the three of you would need to each put in capital to pay that fee. If you each pay $33,333 you would be equal partners. If one person pays $50,000 and the other two pay $25,000 then the person who put in $50k would own 50% of the company and the others would each own 25%, etc.
That would be the easiest and most fair way to divvy up ownership. It isn't about seniority, but rather equity would be proportional to capital investment in the company.
Another thing of note is that in most states 2/3 of the ownership - or 2/3 of the board of directors if it is set up as a corporation - must be licensed architects. At least that is the law here in Oregon. I'm not sure if your office manager is licensed but these laws may affect how you set up the business or how you divide ownership.
All this being said, having business partners is like a marriage. If you already are having issues with each other, or don't want to work with one of the potential partners, or you are already arguing over ownership percentages, it is probably best that you don't become business partners. You may just want to move on to a different company or start your own firm. Or you just buy the whole company and keep the other people as employees.
I hope this helps.
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Lucas Gray Assoc. AIA
Propel Studio Architecture
Portland OR
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