I am currently buying into an existing business, which has barely existed for 5 months and hasnt really made any money. I think there is potential in the market. Its an easily replicated business, no big barrier to entry at all.
I am purchasing 50% of the business and keeping the current owner as my partner. I think we get along and he's someone I could work with. I dont want to work on this alone because i have other projects going on as well.
However, the way i see this business growing is by taking over other businesses in this niche. I have the capital to facilitate such takeovers. My question is, when one partner invests more money in a business, do you change the equity ratio?
Or do you treat that investment as a secured loan to the business which must be paid back with interest first and let the equity ratio stay the same?
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