Finally, you and your investor need to negotiate how much of the company they are actually buying. If they buy 80 percent of your company, and your company is valued at $2 million, they write you a check for $2 million. They will ask to roll over 20 percent of the equity also, so you will put $200,000 back into the company (and they will invest $800,000, with the other $1 million being debt). Another way of thinking of it is the investor buys 100 percent of your company, and you buy 20 percent back on the same terms that the investor has. |