Becoming a partner in a consulting engineering firm.

[ee2002]

I am licensed and have been working for the same engineering firm for about 5 years now. My responsibility has increased significantly and I am actively looking for new clients and new work to bring to the company. My boss has spoken with me about the future possiblity of partnership, but there is no clear indication of when it might happen. My first choice is to keep working at this firm and become a partner. However, since I am producing and have the ability to bring clients to the business, I will go out on my own if my boss changes his mind and decides against a partnership.

The question is: How long should I wait to try and become a partner at this firm? I do not see myself as an employee ten years from now and I just do not know what amount of time put into the firm would be fair for both parties before some kind of partnership is decided on.

These questions are geared toward people who started out as employees within an engineering firm and then became partners/principals sometime later on.

1.) How many years did you work as an employee before you became a partner?

2.) Are you licensed?

3.) Was negotiating a fair percentage difficult?

Thank you in advance for any and all feedback.

Cheers!

 

[ctopher]

I have never been in the 'partner' situation. But, I have a good friend that has and is in the business of helping people become partners. He tells me that if someone asks you to become partner, and it has not happened very soon, a good chance it's not going to.
I suggest not waiting for him.
Just my 2 cents.

Chris
Systems Analyst, I.S.
SolidWorks 06 4.1/PDMWorks 06
AutoCAD 06
ctopher's home (updated 06-21-06)

 

[IRstuff]

Have you pursued this matter by asking? How would anyone know what you want if you don't say?

At the very minimum, you should ask for what timeline they're thinking of, if any. Only then can you make a rational decision based on your specific circumstances.

TTFN

 

[TDAA]

(I agree with IRstuff. Find out what is going on. Have they added partners in the past? How long had they worked for them?

If you are the first, then they may take a while, to be sure that is what they want to do at the time. It is liekly hard for the to make that decision. If this is more of an internal ownership transition for retirement of the older owners, then they might have a set schedule / protocal to follow.

 

[eric1037]

One thing to really be aware of is non-compete agreements. They are common for partners and might limit you if you decide to leave the company.

 

[ee2002]

IRstuff and TDAA,

Have you pursued this matter by asking? How would anyone know what you want if you don't say?

My boss actually brought it up when I started asking for more responsibility and showed motivation to learn the business. I followed up with him on it at a later date and he seemed open but, did not give a clear indication of when he would be ready as far as timeline goes. I get the feeling that he has not thought much about this stuff, but I could be wrong.

Have they added partners in the past? How long had they worked for them?

They have not added parters in the past. The partership discussion came up with previous employees, but I do not think they were able to come to agreement.

 

[IRstuff]

You need to get something definitive from your boss then.

I would ask again in a couple of months; put it on your calendar. And, perhaps give him one final opportunity in 4 months. I would suggest that you might actually want to establish some benchmarks yourself, e.g., what do you think you need to know or to have experience in before you start your own company. You can then status your efforts to those benchmarks as a reminder to your boss that you want to move up.


At that point, you can assess whether you want to hang out there until you decide to move on, or to move on more immediately.

TTFN

 

[GregLocock]

How can they impose a non-compete after they employ you?

Cheers

Greg Locock

Please see FAQ731-376 for tips on how to make the best use of Eng-Tips.

 

[MedicineEng]

By signing a new contract or adding a clause to the existing one?

 

[GregLocock]

In which case you can negotiate.

Cheers

Greg Locock

Please see FAQ731-376 for tips on how to make the best use of Eng-Tips.

 

[eric1037]

At our company, all shareholders are required to sign a non-compete agreement. If you don't sign, you can't be a shareholder. Simple as that.

 

[tripleZ]

Equity partnership or "title" partnership? If it's a true equity partnership, beware of the cost as you would likely be expected to either compensate a retiring partner for his/her stock in the operation, or pay the existing series of partners back for diluted share value. By pay, it usually means you forego a certain salary increase. It also opens you up to potential personal liability in case the firm is sued (assuming it's not a C/S-corporation or a LLC). Just a warning that you might be in for sticker shock. But the plus side is that you actually have a vote in the direction the company takes, and can directly reap the benefits from the results.

 

[ajack1]

ee2002, I have never had the offer of becoming a partner but I have set up my own company, you seem to talk about that as a second option, I would give that a great deal of thought.

Believe me when I say you will work incredibly long hours for little or no financial reward, at least in the early days. You will be up to your neck in debt or you will have risked a large chunk of your life savings and possibly your house. Depending on what experience you have you will almost certainly encounter problems you never even knew existed, health and safety, bookkeeping, legal documentation, dealing with banks and accountants, chasing up debts, the list goes on and on and that is before you even think about work that you will charge money for.

In many ways it is the most rewarding thing I have ever done but it certainly is not a stroll in the park or a licence to print money, unless it is REALLY what you want to do think twice.

Good luck whichever path you follow.

 

[ee2002]

TripleZ,

How does the "title" partnership differ from that of the equity partnership?

Thanks.

 

[ziggi]

If you really are interested in a partnership, read up on it. Read up on the legal ramifications, on common fees and partnership setup procedures etc etc, then discuss these with your boss. I shows your boss that you're interested and you arm yourself with information.

Alternatively you could setup your own business, but it requires even more reading and research, and it is riskier than partnering in an established business.

Finally regarding taking clients with you, remember that brand image counts for alot. Your employer will have an established reputation, as a start-up your personal reputation is what counts, but in most cases it is not nearly as good as your employer's.

 

[tripleZ]

Title partnership is basically a job title. You attend board meetings (depending on size of course), have decision making ability, etc., at least in theory. But if you don't own actual shares of the company (be it corporate shares, etc.), you would not truly be a partner. In a way, I guess you could say it's a nice way of calling someone a high level manager. Sounds odd, I know.

So I guess my point is that if your boss is not offering you ownership shares in the company, or asking you to buy in, then you are simply accepting a title, maybe a higher paycheck, and more authority, yet you would not have true voting rights in something like a company sale, debt assumption, etc.

 

[ee2002]

TripleZ,

Sounds like the title partnership does not mean one would share in the profits or losses of a company, but instead they would simply hold a "title", possibly be paid more than the next guy and have more of a say in the decision making process.

Anyone else out there with experiences or ideas to share? Any feedback is appreciated.

Cheers!

 

[dig1]

In my experience the title partner has always involved an equity stake. Usually "associates" do not have equity stakes but get paid more and also have input in the direction the company will follow.

I agree with IRStuff bring the issue up with your boss but do not wait more than 4-6 months. I have seen these "opprotunities" dangled in front of people before, espically in small firms, and have materializing.

 

[ee2002]

dig1,

You say you have seen these opportunities dangled in front of people. Have these people that you know successfully become partners, or are they still in negotiation?

 

[dig1]

In the situations I was mentioning it never happens. The specific instances are people who work in companies w/ just one or two owners (partners) and there is a younger engineer who they don't want to lose so the mention of it is made. But nothing ever happens.

In larger firms, people are promoted to partner (and have to buy into the firm) on an annual basis or maybe every two years. Associates are added as well.

About ten years ago I was offered to go to a small start-up firm. I know the principal very well and thought it would be a good opprotunity until he said I would never be able to obtain an equity stake. At that point I realized there was no point in going. For me, it was the defining reason to stay.

A little over a year ago I started my own one-person company and haven't looked back. The overhead component can be daunting and I suggest you have substantial cash reserves to (1) fund the business start-up (software, codes, references, additional computing equipment, E&O, comp, general liability, the list goes on) & (2) Ride out the lack of work which will come.

I have been extremely fortunate that my former employeer (not a consulting firm) has been a very good client. I have also developed new clients from old contacts. I have a non-compete and secrecy agreement with my old employeer but we negotiated the details that were satisfactory to both and protect each other.

Back to the original question, I would have a very open discussion w/ your boss about what his plans are. Do not tell him you will leave unless you are ready to give 2-3 weeks notice the day you tell him. Other than that it is just saber rattling.

If you do give notice and he decides to change his mind, politely ask for a draft partner agreement within one week. If he doesn't produce he didn't mean it.

Good luck with this. It is never an easy decision and I do not envy your spot. No matter what happens, keep your cool and do not get angry in front of him or co-workers.

Patrick