Legal Question in Business Law in New Jersey

That is not a legal question. You might try asking your accountant for an opinion. You can also find help on issues like the one you raise through the Rutger's University small business assistance program.

See also: http://info.corbettlaw.net/lawguru.htm

This is a relevant and important question for startups however the question cannot be answered based on these facts alone. A term sheet typically contains many more important terms such as preferences, control rights, investor protective provisions and the like.

If you don't already have an attorney I highly recommend that you contact a startup attorney. Feel free to contact my office at your earliest convenience. My practice is dedicated to technology and startups.

Roman R. Fichman, Esq.

www.TheLegalist.com │ @TheLegalist

email: Info (@) TheLegalist (dot) com

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Disclaimer: This post has been written for educational purposes only and was not meant to be legal advice and should not be construed as legal advice or be relied upon. The post may contain errors, inaccuracies and/or omissions. You should always consult an attorney admitted to practice in your jurisdiction for specific advice. This post may be deemed as Attorney Advertising.

There are several issues to be considered in making your choice.If you would like to have a discussion with me on a courtesy basis, please call (973) 228-6786. If you would like to know more about me, see www.superlawyer-nj.com

Philip L. Chapman, Esq.

Of Counsel

Lum, Drasco & Positan, LLC

103 Eisenhower Parkway

Roseland, NJ 07068

While I agree with the other authors, I am currently involved in a similar situation for a client. The real question is long-term economics - which will be less costly in the long run - paying a higher fee up front or paying a lower fee and giving up some equity for which you will be paid. If the product/service will be successful and profitable for a long term, the higher fee will be less costly in the long run. However, if there is the possibility of more funding being needed, having an equity partner with access to capital might be better in the long run. Given my druthers, a small equity partner with access to capital, is probably the better choice. Less money up front, and a small price to pay for access to future capital. This is a response to an Internet question and the reply is not intended to be legal advice or as creating an attorney-client relationship.

As H.L. Mencken said, �For every problem there is a solution that is simple, neat and wrong.� Your question is business/financial in nature, not legal. A qualified CPA or financial analyst is likely to be able to answer that question. However, in light of the magnitude of the deal, it would be prudent for you to have a business attorney as well. My practice concentrates on business law and business start-ups. Please visit my website! www.bgartenberg.com or call me if you�d like to learn more about me or my practice. Thank you.

Kindly note and remember that my response is merely a general comment on the law related to your question, and NOT legal advice or opinion. Also, your question and my response does NOT create an attorney-client relationship between us. You cannot rely upon what I have written, because I do not have all of the information that I need to advise you or render an opinion. Even simple facts you have not shared can completely change my answer. For me to give you legal advice or opinion, you would need to hire me to be your lawyer, and then we would need to discuss this in detail and go over the documents.

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With best wishes,

Barry F. Gartenberg, Esq.