Several years ago my client who I'll call "Scotty" bought a franchise business in the service sector. For a number of reasons, the dominant one being the need for extra capital, he introduced a solicitor as a silent 50% partner. I counselled against this at the time, but he went ahead and did it anyway. My concern was that Scotty, being a highly-motivated and busy individual, would be doing all the work and would ultimately become disenfranchised with having to share the benefits.
After a year or so, the cracks started to appear and I could see a restructure was required. To Scotty's surprise there were alternative forms of finance available that did not require equity. We tapped into this and bought out the other partner.
Because the business now needed to work harder to repay the loan, a more aggressive business plan was required. We identified the key parts of the business that needed to perform and focussed on them. Scotty and I maintained regular contact to ensure he remained on track. The loan was repaid within 18 months.
By then the business was tracking so well it was the highest performer within the franchise group in the state. At the same time, another business within the group was struggling financially and was taken back by the franchisor. And who do think the franchisor approached to take over the franchise. Naturally it was the state's top performer, Scotty. So he ended up with another business effectively doubling the size of his business overnight with minimal capital outlay.
These days, our conversations have turned from "how can we get this business ticking over?" to "how can we better structure my investments to optimise their performance?". Much more pleasant conversations.