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Thread: To partner up with someone with a slightly checkered past or not?

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    Default To partner up with someone with a slightly checkered past or not?

    Hello,

    I have recently been approached at my current position as a bar manager in a fairly successful small bar open for just over a year, to open a much larger operation as a co-owner elsewhere. The owner of my current bar has approached me about selling me the bar within this last year, as he has much bigger plans, but we have not talked about the fine details as of yet. This new space is about 2,500 sf and could not be in a better situated part of the city. The neighborhood itself is growing at an incredible rate; old buildings being torn down to erect increasingly larger apartment buildings. There is perfect foot traffic and a high number of other restaurants and bars in the area, but none offering what exists in the business plan. 'Kitty-corner' across the street is a pair of restaurants that collectively do an average of $12m gross annually and will be closing down within a couple of years, due to the owners of the land selling to a developer to build more apartments. The build-out is looking to be in the $250k range and the person whom approached me has about $200k liquid, ready to start construction immediately in the new year. The first offer is 15% equity if I personally raise $50k to the table and I am responsible for the creation and design of the full beverage program for two different spaces and the management of daily operations and hiring and management of entire FOH staff. I would probably negotiate for a higher equity percentage as I have been bartending and managing for seven years, have over ten years' experience in the service industry, and would most likely end up being the face of the entire business, but that is not the reason for this post.

    This is an incredible opportunity. I believe strongly that with closely paid attention and hard work on all of our parts, this could, and will be a very successful business. Also, being that it is in a rapidly growing neighborhood and we have been promised in the lease agreement options for two ten-year leases, the likelihood of being bought out of our lease in order for the land to be developed is quite high, presenting an investment opportunity as well. The question comes in with my potential main partner. As I mentioned before, he and our other partner, his brother have 80% of the projected budget, liquid, ready to go. But, upon doing some sleuthing, a few questionable things have popped up involving this guy. As I confronted him, he was neither defensive nor angry, but in fact was very candid about his past and even shared further beyond what I asked. He seemed to realize over about the past fifteen years or so that not doing things entirely legitimately was not work the risk although, as a younger man didn't seem to think that way. He mentioned a number of illegal dealings in order to be successful, which has always been very important to him, citing his Eastern European background as an influence. I believe what he says about how he operates now, as he has two restaurants currently open that seem to be doing quite well, and I get a pretty good feeling from him as a person but I am faced with a very difficult question:

    Do I overlook this man's checkered past and the fact that he is open about making what I consider to be morally wrong decisions in his youth so I can be a part of a potentially very successful business and investment opportunity? Is it possible to move forward and protect myself in a way that if anything arises out of his past, I am not involved and thus unaffected? I am recently married, and so I have more than just myself to think about.

    I appreciate any thoughts on the situation. I've been hearing my family's opinions about it for awhile, but I thought maybe some unbiased input might help me look at the entire scenario a little more objectively.

    Thank you for you time in reading this, and any thoughts you might share.

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    If you proceed be sure you have everything and I mean everything in writing in a signed contract so there can be no misunderstandings. One other negative I see is that with them being brothers should there be any differences of opinion they will stick together.
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    If that money has anything to do with criminal activity, old or new, past or present and a connection is made by law enforcement ANYWHERE while investigating anything remotely connected to him or his past, you lose the bar. Period. It gets seized and you probably get charged with some kind of conspiracy. Bars and restaurants are the first places people hide or launder money, so it's the first place law enforcement ripss apart.

    That being said, I love the bar business and spent 20 years in it. What you've described sounds like a good opportunity and just based on what I read, I'd probably be excited about it too.

    Be sure the money comes from legit sources that can be verified with records and tax returns. Law enforcement won't just take your word for it, and neither should you. Legit money has a paper trail.

    Also, depending on your state 9 times out of 10 you'll be asked about your income sources by any number of agencies that you'll need licenses from. Here in NV bars have gaming machines so the investigation by the gaming control board is extensive, and expensive. In most states the liquor control board also investigates at least the basics before granting a license to serve alcohol. So even of you don't do your due diligence, some licensing agency will.
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    Hi Fuller,

    The deal sounds pretty good, I would say that if you are putting in 50k and working you should get at the bare minimum 20% equity. I would never do anything less then that. I am assuming you will be paid for your hours while you work there? IF yes then its a good deal on the business side.

    As for his past and the money, I would probably want to verify funds, I am assuming they are coming from his other restaurants? Make sure all taxes are paid up on them and the money is clean, the last thing you want is to mix your 50k in with them and then it all gets seized. He has a shady past, but he is open about it, it really comes down to if you really think you can trust him. If you are still on the fence, maybe you can look into if he has some other partners form previous businesses that you can talk to. I personally only do deal with someone I could trust with access to all my bank accounts, a key to my house, a key to my car and my social security number, but that is just me (there is a chance your partner will have actual access to a few of those things) Either way make sure to get everything in writing, get a business lawyer of your own to look over the information and verify funds.

    Also just a sidenote, owning a business is very different from just running a business. Be aware of this and be ready for the stress.

    Whatever you decide Good Luck.

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