The main idea of a SEAL is that investors make a prior investment and are entitled to receive a percentage of what we call the founders` income. What are founders` profits? Most business owners introduce income, other expenses wither away, and what remains is a sum of money that founders can crush into one of three things: 1) founders` salaries.2) Dividends.3) Profit reserves (held in business, but converted at any time into #1 or #2). Traditionally, equity investors are only entitled to a percentage of dividends. But founders who own most of their business have the right to set arbitrary limits between salary, profit reserves and dividends. This doesn`t make much sense and can turn into proxy battles over what a “fair” salary is if investors get a seat on the board, which allows salaries, etc.
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