[mehere]

My partner and I have a company we launched with the help of a friend. While yet to make any profit, we are progressing well and our friend is the one with the industry background that is doing a lot of the work getting our name out there. He asked to buy in as a one third partner and we want to know how to work out what his buy in price should be. If he brings in 4 clients a year we will make $100,000 on their membership fees alone. But that's an "if". But he could bring in more too.

[Ahern & Brucker]

seems to me, if he has the knowledge and can bring in the business, you should make him a 1/3 partner automatically or at least split the profits that way or give him a 1/3 comission on the work he brings in. Better to err on the side of generosity than stingyness..

You could even offer him a small % of the business for every client he brings in and renews... (along with his generous comission) as an extra incentive.

but, if you "need" his money and he won't just lend it to you but insists on buying in, ask for 100k and see if he bites.

[ADVERTISE HERE!]

Rather than worrying yourselves with what the prospective partner will end up doing in the future, simple find the current value the company, and base the purchase price on that. Treat him like an silent partner. If he brings in new clients, its a win for everyone, but you are not in any way disadvantaged if he doesn't.