What's the Best Way to Add Limited Partners for a Bar?
What is the best way to structure taking on limited investors for a restaurant/bar looking to expand? I would like to consider offering investment opportunities of approximately $25,000 or another appropriate amount per share. I have a S corporation in California, but should I entertain an LLP? I would be the general operating partner/manager but I want to make it fair to all. How should the investors be paid and over what period of time? I would also like the investment to be transferable only upon death and I'd like to have the first option to purchase and right of refusal to the named successor.
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You also want to give serious thought to your exit strategy -- what happens if you are no longer involved in the business. Will that continue to make it attractive for these investors? The most important step you can take next is to consult with a local attorney and accountant who are familiar with and have done deals related to restaurant expansions. They should have their fingers on the pulse of industry standards, what return on investment that investors expect, the legal form of business entity that makes the most sense, and threshold buy-in amounts.